What is a Trust Deed?
Designed for those struggling with unmanageable debt, a trust deed is a formal, voluntary agreement with creditors which can eliminate debt through a single reduced monthly payment according to what you can afford. The process is fixed-term, meaning at the end of the agreed time (usually four years) all of your remaining debt is totally written off – provided all payments have been met.
Once we have set up your payment programme you are protected from creditors. They can no longer contact you directly pressuring for money, and no longer have the option to take court action against you. They can only contact us, who will relay any relevant information to you. Trust Deeds were designed to help the thousands of Scots struggling with debt to make a fresh start without having to take the extreme step of filing for bankruptcy.
Do I Qualify for a Trust Deed?
To qualify, you must live in Scotland (or have lived there within the last 12 months), have unsecured debts of over £5000, and be insolvent (unable to pay back the full amount owed).
Unsecured debts include things like:
- Credit Cards
- Store Cards
- Council Tax Arrears
- Unsecured Personal Bank Loan
- Payday Loans
- HMRC Debts
We will also need to work out whether you can pay a monthly repayment which satisfies creditors, usually from income or assets. This usually requires the ability to pay back at minimum 10% of what was owed.
How Is a Trust Deed Set Up?
The process of getting everything set up with us is a sequence of simple, manageable steps.
Step 1: After you get in contact with us we will have a look at your finances and get an idea of the situation you are in. Once we are familiar with your circumstances we will determine what you can realistically pay each month without allowing you to continue to struggle.
Advice from us is free and impartial. There is zero-obligation to take any further steps towards a debt solution following consultation, and no fees apply.
Step 2: Should you choose to proceed, we will become your official trustee. We will offer the proposal to your creditors, outlining how your assets will be handled (your home and car are protected in most cases), and inform them of how much of your outstanding debt they can expect to receive over the agreed fixed term.
Your creditors then have five weeks to accept the terms. If any objections we receive do not exceed one third of the value of the debt owed then the process can go ahead – achieving protected status. If creditors do not respond to the proposal it is assumed that they have accepted the terms.
Should the proposal fail at this stage then we can offer alternative financial advice on how is best to move forward.
Step 3: At this stage, your trust deed will have received protected status. This means creditors cannot continue to harass you, and any legal action against you is out of the question.
You are simply required to meet the terms of the agreement by delivering your single reduced monthly repayment.
Step 4: If after the four years all agreed payments have been met then any remaining debt to creditors will be written off. All creditors who were included in the agreement cannot attempt to pursue you for any of debt that remained.
At this stage you are welcome to enjoy your debt free life.
Advantages of a Trust Deed
- Regain control of your finances by letting us convert your unmanageable debt into a single reduced monthly payment.
- Once you have entered into the agreement your existing debt is frozen during the agreed term – no more fees, such as interest, can be added to the total.
- Put an end to creditor harassment; stop worrying about the phone ringing and the letter box opening.
- Protect your most important assets like your car and home.
- All the complicated administrative stuff is taken care of by us.
Creditors cannot undertake legal action to get money from you.
- There are no additional fees for our services, they are typically included in your monthly payment, or in some cases from the sale of any appropriate assets.
- Once all payments have been met, usually after around 48 months, all remaining debts to creditors included in the agreement are written off.
- After a fixed term your credit rating will be reset, giving you more freedom to manage your finances in the future.
Your Assets in a Trust Deed
A trust deed is a good way to protect your most important assets while paying off your debts due to the flexibility it offers
Your Home – Unless you choose to do so, it is extremely unlikely that you will have to sell your house. Our advisers will deal handle your assets with the aim of keeping you in your own home.
However, it may be necessary to release some equity (the difference between the market value of the home and the debt owed on it) to satisfy creditors as part of the agreement. The equity, which will have been analysed at the start of the process, may have to be realised (converted into cash) as part of the agreement, but there are many ways to do this without losing the property. These methods of protecting your home will be outlined to you by our advisers.
Your Car – It is also unusual to lose your car if you need it for work or for family commitments.
However, if your car is brand new or worth a significant amount of money then you may be required to swap it for a less valuable model, releasing money to put towards your repayments to creditors. If you are in some form of finance agreement to pay for your car, such as Hire Purchase, this will be included in your monthly expenses. Again, if the value of the car is extreme then it may have to be reconsidered, but usually we can ensure you keep your car.
Find out if you are eligible for a debt solution by getting in contact with one of our advisers today, and let us help you by joining thousands of Scots across the country in taking the journey towards a debt free life.