Trust Deeds: Benefits and Who Qualifies?

Unless you have experienced serious debt problems or have known someone who has you probably don’t know what a Trust Deed is . Many people believe is to do with the property market (Deed of Trust), however a Scottish Trust Deed is a debt solution available to residents of Scotland to help them regain control of their finances which for many varied reasons have become out of control leaving the person with insufficient funds to meet their financial obligations

So What is a Scottish Trust Deed?

A Scottish Trust Deed is a legally binding agreement entered into with yourself and your creditors in order to repay an agreed affordable sum of money towards your debts over a set period, Typically this is usually 36 months (3 years), after this period any outstanding debt is written off. This is the Scottish equivalent of an IVA (Individual Voluntary Arrangement). However the criteria is different between the two with a Scottish trust Deed being the more favorable Being a legally binding agreement, a Trust Deed must be conducted by a qualified insolvency practitioner .They will arrange meetings with your creditors on your behalf, and distribute payments accordingly. The insolvency practitioner is thereafter known as the 'Trustee' for your case.

Do I qualify for a Trust Deed?

A Scottish Trust Deed will not be suitable for everyone to qualify you must owe a minimum of £10,000, be in employment, be able to contribute at least £150 towards your debts. You must also reside in Scotland.

How long does it last for? Typically a Scottish Trust Deed will last for 36 months (3 years). Once you have completed your trust deed any remaining debt written off by your creditors.

Trust Deeds are not suitable for everyone

Whilst looking into all solutions available it is important to not a trust deed is not suitable for everyone. They are typically designed for people who are in difficulty repaying their debts and cannot find an alternative solution to their debt problems. You may have over extended yourself taking out too much credit, suffered a salary cut or experienced redundancy, all of which are justifiable reasons to explore this particular Debt Solution. It may also be able to protect your assets for example your car or your home from the risk of repossession by the banks.

An added advantage behind a trust deed is that interest and charges are frozen. This means the debt will not accumulate and once the trust deed is “protected “ you will be free from the harassing phone calls and the endless stream of threatening letters will be a thing of the past.

What is the downside of entering a Trust Deed?

There are downsides to entering a trust deed . Your credit file will be marked thus warning potential creditors of your previous conduct .This will typically stay on your file for approximately 6 years before you have a “clean slate” .Due to your credit file having defaults against it you would also have serious difficulty remortgaging etc through this period.