Will my creditors agree to my trust deed?

July 15, 2018

What is a trust deed?

A trust deed is a formal debt solution which enables you to make affordable monthly repayments towards your debts for a set period of time, typically four years. After this time is up, so long as you have kept up with the agreed monthly payments, any outstanding debts which were included in the trust deed will be written off. In order to qualify for a trust deed you must owe over £5,000 and not be in a position to clear your debts in full within four years. It is also worth noting that trust deeds are only available in Scotland.

Will my creditors agree?

Each case is different and while the majority of trust deeds are accepted, your creditors do not have to agree to the trust deed if they do not want to. This is often because they feel they can receive more money via alternative means. If either 50% of the number of creditors, or creditors representing at least one third of the value of the debts do not agree to you entering such a plan, then your trust deed will fail to gain protected status.

What my creditors do not agree?

If not enough of your creditors give their agreement, then your trust deed will be what is known as ‘unprotected’. This means the trust deed has no legal standing and creditors are able to continue you to pursue you for the money you owe and also take further legal action should they feel this is necessary. This could include petitioning for your bankruptcy.

What can I do if my trust deed is rejected?

You may be able to continue with your unprotected trust deed, however, you must be aware that your creditors are under no obligation to accept the payments you offer and it is also unlikely that they will freeze the interest and stop any charges from being added to your account. If this is the case you could find your debts continue to mount during this period.

Furthermore, not all of your debts will be cleared once the four years is up. Only those creditors who agreed to the trust deed will release you from having to pay any more, any creditors who rejected the trust deed will still expect you to pay back what you owe.

Instead you may need to consider looking at an alternative debt solution to better deal with your problems. The route you choose to take will depend on the reasons why your trust deed was rejected. When it comes to rejection it is often because creditors feel they would stand to receive more money if you were sequestrated (made bankrupt) than by agreeing to the payments offered in the trust deed. If this is the case you may need to consider sequestration as an option, however, you should always ensure you seek expert help and advice before going down this route. Alternatively it may be possible for you to enter into an informal arrangement with your creditors in the form of a debt management plan (DMP), or your creditors may be open to the idea of a Debt Arrangement Scheme (DAS) whereby you would repay all the money you owe but over a longer period of time.

How Scotland Debt Solutions can help

If you are worried that your trust deed may be rejected, or would like some advice as to the most appropriate debt solution for you contact the team at Scotland Debt Solutions today. We have almost 30 years’ experience helping Scots navigate their way out of the toughest debt problems. No matter how bad you feel your situation is, rest assured there is a solution out there and our advisers are perfectly placed to steer you in the right direction. Call us today on 0800 063 9250 to arrange a confidential no-obligation consultation with a debt expert.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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