Protected Trust Deed in Scotland
Do you feel like you are caught in a never ending debt repayment cycle? Perhaps you are not able to clear your debt over a realistic period of time or your creditors are threatening court action? If you are struggling to cover your unsecured debts and find it hard to deal with your creditors you might want to consider a Trust Deed as a possible debt relief solution.
What is a Trust Deed?
A trust deed is a legally binding agreement between you, an Insolvency Practitioner and your creditors and is available to residents of Scotland. The arrangement allows you to pay off a portion of your unsecured debts in manageable monthly payments over an agreed period, this usually takes around 4 years. After completing your trust deed you become debt free as all of your remaining unsecured debts are written off. You can start fresh with no financial obligations to your unsecured creditors.
How does a Trust Deed work?
Every year more than 6,000 people in Scotland choose a trust deed as a debt relief solution. One of the main advantages of the arrangement is the ability to pay significantly reduced monthly payments based on your affordability while retaining key assets such as home or a car.
Probably the most common question that we get asked is if our clients will be able to keep their home under the trust deed. From experience, in most cases, the answer is yes. Your trustee will evaluate the equity in your home and discuss the options and the best way forward to realise any equity so that you can make an informed decision to lead you to financial independence and debt free future.
How much does a Trust Deed usually cost?
Based on your income, assets and the level of debt your trustee will work out what you can afford to pay each month and deliver the proposal to your creditors. If the majority of your creditors don’t object to the proposal then trust deed will be approved. The cost of a trust deed is a single and affordable sum that you pay to your trustee on a monthly basis, which then gets divided to pay the costs of the trust deed administration as well as a proportion of your debts. You don’t need to deal with any or your creditors as your trustee acts on your behalf throughout the process.
Will you have to pay your insolvency practitioner? Your trustee will receive a percentage calculated into your monthly payments for administering and managing your trust deed until your arrangement is complete. The amount is in line with the industry agreements and you are not required to pay anything extra.
Is protected Trust deed a right option for you?
If you are struggling with debt, a trust deed could help you live an affordable life. However, it’s not right for everyone as each persons set of circumstances are different and require advice. A Trust deed can be right for you if you are able to commit to regular monthly repayments. The repayments are based on your income and expenditure and ensure that you are able to cover your essential living costs.
Once you sign your trust deed you don’t have to deal with your creditors, your trustee will do it on your behalf. You will stop receiving threatening letters, calls, home visits and the relentless pressure will go away. A Trust Deed arrangement gives you space to breath and allows you to have a fresh start.
What are the main advantages of Trust deeds?
There are a number of things to consider before signing a trust deed. One of the main benefits is that your debt becomes more manageable and you only pay what you can afford. Your creditors can’t chase you or add any more interest charges to your debt as your trustee is dealing with them on your behalf.
However, there are implications attached to a trust deed too. For example your credit score will be affected and you will not be able to take credit for the period when you are in the Trust Deed. Your name will appear on the Register of Insolvencies and your employment status could be affected if you work in professional services or the finance sector.
'Often when we meet with someone suffering financial problems for the first time, they are very stressed and talking through their problems can initially be quite daunting and distressing for them. However, most of the people we meet always say at the end of our meeting they feel a lot better informed about how they can move forward towards a future that will be debt free whether that is by entering a trust deed or where this is not possible or suitable, a sequestration'.
Please note that there are a number of debt solutions available and you should consult with a licensed money advisor before making any decisions. If you would like to find out if Trust Deed is suitable for your circumstances please contact us for free advice.