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Trust deeds

What is a Trust Deed (Scotland)?

A Trust Deed (also known as the Scottish equivalent to an IVA) is a formal debt solution between you and your creditors where you pay back only the percentage of your debts that you can afford and the rest is written off. It is seen as a good alternative to Sequestration.
A Trust Deed normally lasts for three years and at the end of this period, any unpaid debts are written off.

The terms and conditions of the agreement are tailored to suit your individual circumstances and payments are based on what you can afford to pay each month. If creditors agree to the terms of the Trust Deed it will become protected and legally binding.

Read on to find out more about Trust Deeds or fill in the form and one of our advisors will contact you to advise on your debts.

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Trust Deed Questions and Answers

Debt Consolidation could be suitable for you if:

  • You are struggling to keep up with your debt repayments
  • You are a resident of Scotland.
  • You have debts over £8,000.
  • 1 easily affordable monthly payment based on your income and expenses.
  • A Trust Deed offers you protection from creditors.
  • A Trust Deed can be complete in as little as 1 year if you can offer a lump sum payment.
  • All interest is frozen immediately.
  • A Trust Deed is suitable for tenants or homeowners, individuals or couples and even businesses owners.
  • If you are a homeowner with equity in your property you may be required to introduce part of your share of this equity in the final year of the arrangement. If you can’t get a remortgage your arrangement can be extended for up to another year.
  • If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the Trust Deed is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your Trust Deed.
  • If your Trust Deed fails, your creditors may request that you be made bankrupt. This will always be discussed before your arrangement commences.
  • Your credit rating may be impacted for up to 3 years from the commencement of your Trust Deed.

You will need the help of a Trust Deed Provider or a Licensed Insolvency Practitioner or IP. The IP advises you, helps you and puts your Trust Deed Proposal to your creditors.

If a Trust Deed is your best option, setting it up is straightforward. Firstly a debt adviser will go through your situation with you, discussing your debts, circumstances, your incomings and outgoings etc... This will help them determine how much your monthly contribution will be to your creditors. If at this stage, you want to proceed, then your proposal is drafted. Your creditors will vote on your trust deed and after this period, if there are no major objections, your Trust Deed will become protected - you will be free from debt in 36 months.

When your Trust Deed becomes protected, you and your creditors are bound by it. As long as you continue to make your monthly payments, none of your creditors can harass you, back out, or commence any legal proceedings. Any correspondence and telephone calls should cease.

This depends on your circumstances and your debt level, but everything will be detailed before you have to make any decisions or commit to anything.

When your Trust Deed is complete your payments are taken as Full and Final Settlement with your unsecured creditors and any remaining debt is written off. You will be Debt Free.

Your normal mortgage payments should continue and your mortgage will be allowed for when we are working out your monthly incomings and expenses. However, if you do have a lot of equity in your property , this may be considered in your Trust Deed.

Your Trust Deed doesn't cost anything during the set up stage. Only when your Trust Deed becomes protected do you pay anything. The fee is determined by your creditors and comes out of your set monthly creditor payment, so you should never receive a bill.

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If you need some help and advice on how to deal with unaffordable debts, click the button below and fill in our contact form. One of our advisors will then contact you to discuss your options.

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