Live in Scotland? Could a Trust Deed Help You?
A Protected Trust Deed is a Scottish debt solution that enables you to pay one affordable monthly payment towards all of your unsecured debts, typically for 48 months (4 years). Once approved for the Trust Deed you would stop paying your creditors and make one monthly payment to your debt. You would repay what is affordable throughout the 48 months and any debt which is not repaid would be legally written off.
This legally binding agreement between yourself and your creditors offers you protection so your creditors are no longer allowed to request payment. If you enter the solution then fees and interest is included too. In return, the creditors will receive a fair and affordable percentage of their money back.
If you’re struggling to pay your debt back, live in Scotland and can contribute to a set monthly payment towards your debt, then a Protected Trust Deed could be suitable for you.
Our charity debt advice team can help you understand if you would qualify for this Scottish debt solution, which can help you become debt free. It’s important you seek debt advice before entering the debt solution to ensure it’s the right option for you.
Please call 0800 085 0226 or complete our debt test below to understand which debt solutions you qualify for.
How does a Scottish Trust Deed work?
If you think a Trust Deed would be suitable to help resolve your money worries then we would be delighted to help guide you through the process.
The first step is to call Debt Support Trust on 0800 085 0226 where one of our friendly debt advisers will explain all of the available debt solutions you qualify for, after completing a statement of affairs. We will be able to gauge how much you can afford to repay towards your debt each month and if the Trust Deed is appropriate, take you through the next stages. You will need to open a new bank account, with a company you don’t owe money to, regardless of which debt solution you enter. If you don’t owe money to the company you bank with, and don’t have an overdraft with the bank, then you may be able to retain your bank account.
We need to gather paperwork so a licenced insolvency practitioner can create a proposal which is then sent to your creditors. The proposal outlines how much you can afford to repay and what the creditors will receive. The insolvency practitioner fees typically come from the monthly repayments, then whatever is left is distributed to each creditor on a pro-rata basis.
Once your proposal is signed your Trust Deed is advertised on the Register of Insolvencies, after which time, your creditors have 5 weeks to accept or object to the proposal. If creditors don’t vote then they are deemed to have accepted the proposal. If enough creditors reject the proposal then your Trust Deed would not proceed and we would assess other options to repay your debts. If we thought your proposal would not be accepted, for whatever reason, we would inform you before proceeding to the proposal stage.
Once your proposal is accepted your Trust Deed is then Protected. Your creditors can no longer take action against you to recover the money they are owed. You would stop making repayments to your debts and instead make one affordable monthly payment to the solution . Each year your income and expenditure will be re-assessed to ensure you’re paying an affordable amount.
Once all payments have been made and equity from assets realised for your creditors, then you would be discharged and any remaining debt would be legally written off, along with interest and fees. You will receive a certificate to confirm you have been discharged and are no longer subject to the Protected Trust Deed rules.
Free Scottish Debt Advice
At Debt Support Trust, our charity advisers will explain every appropriate debt solution to ensure you’re getting tailored and transparent advice. This will help you make an informed decision which will empower you to decide which debt solution is right for you.
As a charity, you will never receive a bill for our support and you can speak to us as many times as you require our assistance. Should you choose to speak to us about your debt problems we will listen to your circumstances and provide honest guidance on the best steps to become debt free.
You can start the process today by calling 0800 085 0226 or by completing our debt test.
Benefits of a Trust Deed in Scotland
- You only make one monthly payment to your debt and only pay what you can reasonably afford.
- Your interest and charges will be frozen and you can take control of your finances once again.
- You will not have to liaise with your creditors as this is done on your behalf.
- Once the solution is signed and protected, both you and your creditors are legally bound by the agreement, which means should you complete the Trust Deed, you will be debt free having repaid what you can reasonably afford each month. Any debt not repaid will be legally written off.
- If you are a homeowner you may be able to retain your property, the insolvency practitioner will only be interested in any available equity
- There are no upfront fees for a Trust Deed and typically any fees for the debt solution are taken from your monthly repayments. This means there’s no hidden costs.
- You will regain control of your finances and can plan for a future where you will be debt free.
Negatives of a Protected Trust Deed Scotland
- If there is any available equity within your property this will have to be included in your proposal.
- If you are able to repay all of your debt in the future (for example, you receive a cash windfall, inheritance or win the lottery) then you would be expected to do so. If your cash windfall is greater than the amount of debt and fees, then you would retain the remaining balance.
- Your employment contract may not allow you to enter a Trust Deed – you would need to check this with your HR department/ employer.
- If you enter the debt solution and do not meet the terms of the agreement you may be sequestrated.
- Your income and expenditure will be reviewed regularly and your monthly payments may fluctuate up as well as down.
- The default applied to your credit file will be listed on your credit report for six years.
How to qualify?
It’s important that anyone entering a Trust Deed is suitable for the solution and is given appropriate advice.
To be accepted for a Trust Deed you must:
- Reside in Scotland.
- Be unable to pay your debts as they fall due each month. You must not be able to repay your debts in 48 months or less.
- Be able to make a monthly contribution to your debts. If your income is solely reliant on state benefits (universal credits, for instance) then a Trust Deed would not be the best option. If you have non-benefit income as well as state benefits then you could qualify, but your monthly payments must not exceed your non-benefit income.
- Your unsecured debt must be £5,000 or over. The £5,000 threshold for unsecured debt is per person. If you partner also has debts and wishes to enter a Trust Deed then you each must have £5,000.
- Not have been made, or voluntarily entered bankruptcy in the past 5 year.
Could a Scottish Trust Deed help you?
Get in touch and a friendly charity debt and money adviser will be happy to help.
Trust Deed Case Study
Helen reached out to Debt Support Trust because her debts had grown quickly following a separation from her husband. She had two teenage sons and worked full time.
The debts rose because whilst Helen could afford her monthly expenditure, she could not afford to service the debt. This meant she was using credit to pay for monthly living costs and her income was paying her credit commitments to personal loans and credit cards.
Helen realised this was an endless cycle of debt and repaying almost £40,000 would be a difficult ask.
After discussing all the positives and negatives of each debt solution, Helen decided a Protected Trust Deed for 48 months would be the best route to resolving the debt. Helen is paying £240 towards all of her debt for 48 months (£11,520) and once she’s made all her payments the remaining debt will be written off and she’ll be once again debt free.
When we first spoke to Jack & Elenor it became clear that the majority of their debt was in joint names. This meant they were both liable for the full amount of the debt.
Both Jack and Elenor worked full time but the largest debt was a joint loan they both had for £22,000. They each had other debts, but the joint loan was the largest single debt.
We explored all options like a debt arrangement scheme and a trust deed. Whilst you can’t enter a joint trust deed, both Jack and Elenor decided it would be best to enter a trust deed each to protect themselves from their creditors and each paying one monthly contribution to all of their debts.
Marion called Debt Support Trust because she was worried about her spiralling debts. It was giving her sleepless nights and was affecting her marriage.
Marion was a mother to two children and worked full time. She jointly owned her property with her husband and there was approximately £20,000 of equity in the property. She had £25,000 of unsecured debts and her partner also had some smaller debts. She had been juggling the debt since her hours at work were cut and the couple became unable to balance the rising debts.
After listening to Marion and understanding her personal and financial situation we made some recommendations on debt solutions she could be applicable for. Marion decided that a protected trust deed would be the best option. The monthly payment was £150 and Marion would not have to make any other payments or liaise with her creditors. A debt adviser made Marion aware that equity in her home would be assessed in the Trust Deed and if it were not possible to realise this money, then her payments would last for 60 months, instead of 48.
Marion was able to move forward making one monthly affordable payment to all her unsecured debt. She was delighted and her husband did not enter a debt solution as he was able to manage his credit commitments.