Reviewed 23rd December 2021
Whether you’re particularly knowledgeable about trust deeds or you’ve never heard of the process before, it’s crucial to recognise exactly what you’d be entering into. They are a useful debt solution in Scotland and that is largely down to the number of advantages they offer.
If you’re suffering from spiralling debt problems and it feels like there is no light at the end of the tunnel, speak with Scotland Debt Solutions and we can analyse your circumstances and put you on the path to a debt-free future.
In the meantime, here are some trust deed advantages for you to mull over:
- It is unlikely that you would be required to sell your house in order to create proceeds for creditors, however if you are unable to release the equity from your share of assets then this may be the final option.
- You have one fixed monthly/weekly payment to make which is calculated using a standard common financial tool approach taking into account essential living costs.
- If you have a change in circumstance then your Trustee shall review and take all factors into account before deciding whether to reduce or increase your contribution if appropriate.
- If a creditor does try and harass you then you are able to pass their details to your Trustee who will contact the immediately advising they have to liaise directly with the Trustee and no longer contact you directly. By taking out a trust deed with Scotland Debt Solutions, we can help stop the phone calls and letters from those you owe money to. We will take responsibility for liaising with your creditors and letting them you that you have entered into a trust deed, and that all further communication must go through us.
- Creditors are also no longer able to take court action against you or petition for your bankruptcy for debts incorporated in the trust deed if your Trust Deed reaches protected status.
- After the period of your trust deed, normally four years you will be debt free ( subject to having certain debts such as student loans, criminal fines which are not discharge via a trust deed).
- If enough of your creditors agree to the trust deed repayments, your agreement will become ‘protected’ which means that any interest and charges will be frozen to prevent your debts increasing any further.
- Creditors generally will be inclined to agree to a trust deed as they normally secure a better return than if you went into sequestration (bankruptcy).
- If you have your own business, you may be able to continue trading.
- You can continue to act as a Director of a Limited Company as long as the articles of association do not restrict this are amended to reflect the fact you are subject to a trust deed.
- Less likely to affect your job. However, you should always check your contract of employment.
- Once a Trust Deed becomes protected can prevent and uplift earnings arrestments.
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Get Your ReportFAQ on Trust Deeds
Applying for a trust deed has been on my mind for some time but I’m concerned that all creditors may not agree to my trust deed? What if one of them doesn’t agree?
Yes, although a Trust Deed is not a court process the creditors you have made defaults with are likely to notify the credit reference agencies that you have missed payments. There will be an entry on the Register of Insolvencies that you are subject to a Trust Deed.
A Trust Deed can be setup very quickly. Once you have discussed your financial situation in full with an Advisor and taken time to consider that this is the most appropriate option taking all factors into account. The Trust Deed document and accompanying paperwork can be signed which then gives the Trustee the relevant powers to act on your behalf. The Trustee will make contact with all your creditors and from that point you can stop making payments to the individual creditors and pass all correspondence for the Trustee to deal with. Thus relieving you from the pressure instantaneously.
The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level.
There are no initial setup or additional hidden costs in a trust deed. The Trustee’s fee’s and outlays for administering your trust deed are met from the contributions you pay in on a monthly basis or/and from the assets which may have to be realised in your Trust Deed. The Trustee is paid prior to making a distribution to your creditors. The Trustee’s fees are broken down into three categories, fixed fee, percentage of realisations and costs and expenses associated with the Trust Deed.
A protected Trust Deed is binding on your creditors. It means that if you comply with the terms of your trust deed then the creditors cannot take any further action against you to recover any debts you might be due to them. They cannot arrest your earnings or petition for your sequestration whilst you are subject to a Protected Trust Deed. Unlike an ordinary Trust Deed which is not binding on your creditors. If when presented with your Trust Deed Proposals more than half in number or one third in value of creditors object to your Trust Deed then it will fail to reach protected status.
The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level. In addition to this the Trustee will explain at the outset of the Trust Deed that should you have any change in circumstance which will affect your ability to make a contribution you must update him with immediate effect. If you have a change in circumstance and notify the Trustee of this providing evidence to substantiate your change in circumstance. The Trustee will take all factors into account before making a decision as to whether to reduce, suspend, stop or infact increase your contribution. It may be depending on the circumstance that your Trust Deed period is extended or shortened or that you are able to suspend the payments until such time as your Income position improves.
The main differences between and IVA and Trust Deed are that one is an English Debt Relief process and the other is a Scottish debt relief process. An IVA can only be accessed by English and Welsh residents whereas Trust Deeds are only available for Scottish Residents. In an IVA you must have minimum unsecured debts of £15,000 whereas a Trust Deed is a minimum of £5000. The duration is also slightly different in that an IVA generally lasts for sixty months whereas a Trust Deed lasts for forty eight months.
I am a single mother of two children with a number of debts and loans, including some spiralling payday loans that are stressing me out. I have looked into debt management plans and trust deeds and it seems as though the trust deed is the best option but I’m not sure whether I can consolidate all my debts into one monthly payment? Can loans be included in this?
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Trust Deeds in Scotland
A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt will be wiped out.
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