Life after a Trust Deed
June 11, 2015
The end of your Trust Deed will be marked with a formal discharge letter from the Trustee, and your entry on the Register of Insolvencies will be removed. If your property has been earmarked for inclusion within the Trust Deed, you may need to pay a lump sum to fulfil the final terms, however.
Trust Deeds generally come to an end after three or four years. Any remaining unsecured debt included in the agreement will be written off, and your creditors will not be able to pursue you for these amounts.
The end of a Trust Deed usually brings with it a sense of achievement and liberation for debtors. But what can you do in practice to make sure that it does not affect you for any longer than is necessary?
Check your credit file to make sure it is updated
One of the effects of entering formal insolvency is the damage done to your credit rating. The Trust Deed will be marked on your credit file for a total of six years from the starting date, and you need to make sure that the credit reference agencies have notification that your Trust Deed has completed, so that they can mark your file accordingly.
This will happen automatically in most cases, but it is worthwhile checking your credit file with each of the three main agencies regularly – Experian, Equifax and CallCredit. If it has not been updated within three months of the end of your Trust Deed, you are entitled to ask your creditors in writing to make the notification.
Rebuild your credit rating
During the course of your Trust Deed, you would not have been eligible to borrow money, and one of the downsides of entering formal insolvency in this way, is that your credit rating is damaged for some time.
You may be offered some borrowing, but you will notice that the interest rates are much higher than for ‘standard’ loans. There are ways of rebuilding your rating, however, and it pays to be proactive in doing so.
- Apply for a ‘credit-builder’ credit card: these will also have a higher rate of interest applied, but by paying off your debt in full and on time each month, you will demonstrate financial responsibility, and in time should be able to apply for a credit card with a lower rate.
- Prepaid cards: you can use these cards to pay for goods and services in the same way as with a credit card. You use your own money to top them up, and most importantly the credit reference agencies are informed that you are paying off the balance regularly.
Save the amount that you would have used to pay your Trust Deed
This is a logical way to start a plan for savings. Having successfully managed your income and outgoings for the term of the Trust Deed, you will be used to living on a reduced amount each month.
This seems like the ideal opportunity to save either part of the amount paid to your Trust Deed, or all of it if possible. This will set you up for a solid financial future, and provide a nest egg that allows you to avoid credit card debt or other types of borrowing.
At Scotland Debt Solutions, we provide professional advice and support to Scottish residents experiencing financial difficulties. If you contact one of our team, we can arrange an initial meeting free-of-charge at various locations throughout Scotland.
Your personal credit score plays an important part in securing new loans and credit, and can affect your financial life for better or worse. Lenders use the information in your credit file to determine whether you present a high risk of default, and if your credit score is low, you may find it difficult to […]
Credit unions offer a range of financial products including current accounts, savings accounts, and loans, and can be a good alternative to banks and building societies whilst also helping your cash flow. There are credit unions all around the UK, almost 100 of them operating in Scotland. They’re not always widely advertised, however, and although […]
It’s a worrying situation when you realise your outgoings exceed your income, and it can be difficult to prevent debt in this situation, but there are solid steps you can take to get back on track – you just need to act quickly. Increasing your income or reducing the money going out are essentially what […]
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work. As far as your old employment is concerned, it’s important that you check your final wage slip to […]
If you are a Scottish resident in financial difficulty, you may have entered into a Trust Deed in order to restructure debt repayments to creditors. A Trust Deed is a fixed voluntary agreement made between the debtor and creditor, with the help of a trustee. Debt is broken down into smaller, affordable instalments, typically lasting […]
A Debt Arrangement Scheme (DAS) is a government backed scheme which allows you to repay debt through contractual, monthly instalments without the threat of legal action and incurring penalties or interest. The scheme was established in 2004 for Scottish residents in debt, providing an alternative solution to sequestration, the Scottish equivalent of bankruptcy. A Debt […]