A Scottish trust deed works by helping people who are experiencing difficulties with their loans and credit card payments. Your debt in relation to your income must be at a level where you are genuinely unable to repay what you owe to your creditors in a reasonable period of time. If this is the case then you may qualify for a trust deed and be able to take advantage of this effective solution out of debt.
How do I qualify for a Trust Deed?
If you are a tenant or homeowner and live in Scotland (including living with parents) then you have already met part of the criteria. You must have, in most instances, debts of over £4000 which are owed to at least two creditors. You also need to have a degree of surplus income that will enable you to make the payments required under the terms of the trust deed.
It is possible to apply for a trust deed even if you have an impaired credit history which can include County Court Judgements since, because there is no new borrowing undertaken with this debt solution, a credit search is not required.
There are restrictions to be aware of in terms of employment as there are some employment terms and conditions that prevent employees from entering into a trust deed. Some financial institutions and public bodies actually prohibit people from holding particular positions if they have a trust deed.
What is the trust deed process?
A trust deed is a legally binding document and as such is administered by a licensed insolvency practitioner (IP) who becomes the Trustee. The Trustee assesses your financial circumstances with a view to ascertaining how much you can reasonably afford towards your unsecured debt.
The Trustee is responsible for negotiating and agreeing the terms of the trust deed. This would normally take the form of a single monthly payment which is reduced to a level you can afford for a period normally up to thirty six months. You would make your agreed payment to the Trustee who then splits it and pays the appropriate amounts to your individual creditors on your behalf.
At the end of the three year period any outstanding debt is written off and you then become debt free.
What is a protected Trust Deed?
This is an important part of the process as it is only when the trust deed becomes protected that there is a legally binding agreement that your creditors must abide by. Protection status also means that your creditors cannot take legal action against you. In order to become protected the Trust Deed proposal must be accepted by a majority of the number of your creditors who represent over one third of the total value of your debt.
How do I apply?
We always recommend that you seek professional debt advice in relation to all debt problems but particularly so with a trust deed as this presents a serious situation with important considerations for your future. There may be alternatives to be considered and it’s important to have this information to ensure you make the best decision possible.