Trust Deed Scotland

As with all formal debt solutions in Scotland, the main downside for you will be how it affects your credit rating.

Having a Trust Deed will affect your credit rating for six years from the date the Trust Deed begins.

When borrowing money, credit reference agencies will assess the level of risk and base their decision on your financial history. This will include any defaults, whether you’re in a Trust Deed or used any other form of debt relief tool.

However, once your Trust Deed term has been complete and you have been discharged, you can then start to rebuild your credit rating and apply for a mortgage, credit cards etc.

While in a Trust Deed, you will make reduced monthly payments to your creditors, during which time you can get on with your life.

Before you commit to any Scottish debt solution, you would have a detailed call with an experienced debt advisor and the benefits and risks would be fully explained in the context of your own personal circumstances.

Every case is different to the next and with Trust Deed Scotland, you would receive tailored debt advice on what your debt repayment options may look like.

This is a common question that homeowners ask when they approach us for Debt Advice, and the answer in most cases is yes.

In a Trust Deed, your mortgage and car are protected so that you would continue paying them as normal – subject to approval, and completion.

If your house or car were at risk as a result of entering into a Trust Deed, we would look at the Debt Arrangement Scheme.

With our insolvency industry experience, a fantastic rate of over 99% of our Trust Deed proposals are accepted.

If a creditor wanted to object, it would do so in writing within five weeks of your Trust Deed being proposed. Even then, it would only fail if that creditor represented over 33% in the total debt value or over one half in number. If 67% agree with the proposal, then the other creditors will still be legally bound by its terms, even if they object.

In the unlikely event that your Trust Deed did fail, your Trustee would negotiate your case in an attempt to have it accepted.

Remember other Scottish debt solutions such as the Debt Arrangement Scheme (DAS) and Sequestration can also be available.

Almost all unsecured debts can be included in Trust Deeds such as:

• Personal Loans
• Payday Loans
• Credit Cards
• Council Tax Arrears
• Store Cards
• Catalogues
• Overdrafts
• Credit Unions
• Mortgage Shortfalls (Repossessed property)
• Car HP, PCP Finances (Vehicle already handed back)
• HMRC Bills (Self-employed)

The main debts that can’t be included are student loans, court fines, and secured loans. Contact us today for advice on what types of debt can’t and can be included in a Trust Deed or any alternative solutions.

Find out more information on Protected Trust Deeds.

No setup fees are involved in setting up a Trust Deed. All administration fees are included in your monthly payments:

1. 1) A fixed administration fee
2. 2) A fee based on how much debt you pay during your trust deed term

These are charged against the money you owe creditors, so will be agreed between you and your creditors at the start.

Your Trust Deed monthly payments are calculated using your disposable income. Your disposable income is a figure based on a deduction of your essential living costs and offsetting this against your income. The amount left over is the amount of money that you have left to pay your creditors.

When you apply for a Trust Deed in Scotland or Debt Payment Programme, your essential living costs include your priority debts such as your mortgage, or rent commitments and other priorities such as utility bills and council tax.

Allowances are given for childcare, travel expenses, car finance and other essential expenditures are included such as food and even lifestyle costs such as haircuts and hobbies. 

Entering into Trust Deeds or any other formal debt solution means that your monthly outgoings caused by unaffordable debt are significantly reduced, your new Trust Deed monthly payments are calculated fairly, alleviating the stress caused by debt.

 You would struggle to be accepted for a mortgage whilst you are in a Scottish Trust Deed. Any property that you buy in the duration of your Trust Deed vests with the Trustee.

However, it would depend on your personal circumstances such as your income, and whether you can convince a Mortgage Advisor that you can reliably make your mortgage payments.

The minimum debt level required to enter into a Trust Deed is £5,000 and this total debt amount is based on your unsecured debts only.

Examples of unsecured debts include personal loans, credit and store cards, payday loans, council tax arrears, catalogue debts, credit union debts and bank overdrafts.

It may be possible to include a mortgage shortfall from a previous address which has since been repossessed or car finance where the car has been handed back already. Some HMRC debts can be included in certain conditions and if you have a mobile phone bill, for example, you can include these debts also, should you no longer wish to use the contract. You can include utility bills from previous addresses. Some debts cannot be included in Trust Deeds, for example, student loans and court fines.

When you look to take out a Scottish Trust Deed and have less than £5,000 debts, you may also consider the Debt Arrangement Scheme as an alternative.

You may also qualify for more than one debt solution, and in order to understand the advantages and disadvantages of each and how they may directly affect you.

There’s no formal age restriction for entering into a Protected Trust Deed or Debt Payment Programme under the Debt Arrangement Scheme.

You need to be at least 18 to enter into a Trust Deed. This is because if you’re below the age of 18 you typically wouldn’t be able to borrow money legally anyway, as you cannot sign credit agreements if you are under the age of 18 in Scotland.

There’s no maximum age for a Trust Deed, but you may need to consider that Trust Deeds lasts a typical period of 4 years and your ability to repay your monthly contribution may be impacted by how close you are to retirement if your income were to drop significantly before your Trust Deed has ended. Likewise, there may be similar considerations for DAS.

Each proposed case would be considered on its own basis and risks, you can get expert advice on this by calling us on 0141 221 0999.

A Protected Trust Deed is the status your Trust Deed gains when the majority of your creditors agree to its terms and the AIB or ‘Accountant in Bankruptcy’  to protect it.

After your Trust Deed is registered, all creditors have the opportunity to object. However, if either a majority in the number of creditors or a creditor with over 33% in debt value object within five weeks, then it can fail to become protected. If they don’t object your Trust Deed will be presented to the AiB for protection.

Getting your Trust Deed protected means that your creditors can no longer pursue you or take any action to recover the debt. If your biggest creditors don’t agree to your Trust Deed, it’s not ‘Protected’ and therefore not legally binding.

At Trust Deed Scotland^® we have a 99% creditor acceptance success rate for protection and we make the entire process as transparent and stress-free as possible.

If we can see a risk that a Trust Deed may not gain protection, we will always try to manage your expectations and let you know beforehand. In some scenarios, a Debt Payment Programme under the Debt Arrangement Scheme (Scotland) may be more appropriate for your needs.

If you’re a homeowner and your property is worth more than the amount owed on your mortgage, you may have to release some of its equity in order to proceed with a Trust Deed.

Mortgage equity is the difference in monetary value between what you owe on your mortgage and the current value of your property.  The equity value is fixed at the start of your Trust Deed, so if the value of the property should go up, it doesn’t affect the conditions of your Trust Deed.

Where you have negative equity or a low level of equity, a threshold is set where the equity figure can be ignored.

If there is significant equity in your home, you’ll agree with the Trustee how to deal with this in advance. You may, for example, extend the Trust Deed term from 48 months to 60 months.

Where you have a large amount of equity in your home and a Trust Deed is not your best option – the Debt Arrangement Scheme may be more suitable for you, as equity in your home is irrelevant.

Your advisor will discuss this with you, and if necessary, any equity arrangements will be organised before entering into a Trust Deed.

When your agreed Trust Deed term has been complete, your Trustee will issue you with a letter of discharge and you will then be formally discharged from your Trust Deed.

Trust Deeds typically lasts for 48 months but it may be extended by a year if you want to protect your assets such as your home and car.

When you are discharged from a Protected Trust Deed, you will also be discharged from any outstanding debts which were due at the date you signed your Trust Deed. This means that your creditors are no longer allowed to pursue money that was owed to them when you signed the Trust Deed. Any unsecured debt will be formally written off.

As well as receiving the letter of discharge after the Trust Deed term has been complete, a copy of the letter will go to the Accountant in Bankruptcy and the Register of Insolvencies will record your Trust Deed discharge.

Not that the formalities are taken care of, you are officially debt free and able to enjoy Life After Debt.

Should you wish to do so, now that the Trust Deed arrangement has been complete; you can begin to apply for new credit facilities and repair your credit rating.

Yes, we offer advice on all Scottish debt solutions and if a Trust Deed isn’t the right for you, there are other options in Scotland such as:

• Debt Arrangement Scheme (DAS)
• Sequestration (Scotland’s equivalent to bankruptcy)
• Minimal Asset Process (MAP Sequestration for those with no, or low income and assets)

Trust Deed Scotland^® will undertake a free assessment of your financial difficulties and provide you with a personalised illustration of what options are available for you.

In order for you to make an informed decision, its important that you receive balanced debt advice that gives you all the key facts and how they may directly impact you.

There are pros and cons for all available solutions and while most formal debt solutions share common advantages and disadvantages, you should always seek advice from a suitably qualified debt advisor. Call us on 0141 221 0999.

When you enter a Protected Trust Deed your future interest and charges will be frozen. When you successfully complete the Trust Deed term, any remaining unsecured debt will be written off.

After entering into a Trust Deed, you’ll be paying back what you can afford to repay each month for a fixed period.

When you enter into a Debt Payment Programme under the Debt Arrangement Scheme (Scotland), you will legally freeze the interest and charges from the debts included in your DPP.

Like Trust Deeds, you will be paying back an agreed, affordable amount each month for a fixed period, and should you successfully complete the agreed DPP term, you will not need to repay interest and charges.

Yes, Sequestration does affect your credit file.

Usually, credit reference agencies will hold information about Sequestration for 6 years from when it was first granted. Your details will be also added to the Register of Insolvencies for 5 years.

Your credit score can be repaired thereafter, however, caution should be applied as it is often a legal requirement for you to disclose your Sequestration when you apply for a mortgage and therefore you may find your application rejected if you don’t.

If your credit file is important to you – You may consider looking into alternative Scottish debt solutions such as Trust Deeds and the Debt Arrangement Scheme.

People sometimes worry that they will be chased for payments after their Trust Deed has been protected, However, once you enter into a Trust Deed, your creditors will be required to direct any contact to your Trustee, rather than to you personally.

A Protected Trust Deed uses formal legislation, meaning your creditors are legally bound not to contact you for any payments, as the payments for your debt will now come from your Trust Deed contributions.

If in the rare instance that you are in a Trust Deed and a creditor who is included in this agreement makes contact with you, you would refuse to engage in any conversation with them and simply refer them to your Trustee. Don’t worry about this, your Trustee will reiterate the terms of the trust deed to the people you owe money to at any given time.

It’s not uncommon for debts to be sold onto other companies, and the new lender may write to you to inform you of this process. On any such occasion, it is merely for informational purposes only and your Trustee will deal with this transfer on your behalf. All you need to focus on is repaying your agreed contribution as normal.

For an individual, a Debt Arrangement Scheme in Scotland can last for a ‘reasonable’ length of time with no official minimum or maximum length.

It is unusual for the Debt Payment Programme (DPP) to last longer than 10 years, and there may be more suitable solutions for you such as Trust Deeds.

For businesses, a business Debt Arrangement Scheme may last for a maximum of 5 years.

Yes. Entering into a Trust Deed will affect your credit rating for 6 years from the date the Trust Deed begins.

Consider that if you are at your credit limit, or have already missed payments and defaulted on your agreements due to having unaffordable debts, then your credit may already have been adversely affected.

If you continue to struggle with your debts and make minimum payments, you will have an increased risk of being unable to repay your debts within a realistic time period, meaning the chances of defaulting on your original agreements will increase as a knock-on effect.

Trust Deeds in Scotland are only available to residents who have lived in Scotland for at least six months before they apply. You would typically have at least £5,000 of unsecured debts to qualify. This typically includes credit card debts, bank overdrafts, and unsecured personal loans.

If you want to find out if you’d qualify for a Trust Deed or alternative solutions; use our Trust Deed Wizard^® tool.

If you are based in England, Wales or Northern Ireland then debt solutions such as an IVA or a Debt Relief Order may be a more suitable alternative for you.

4 years. Typically Trust Deeds in Scotland last for 4 years. You will make one fixed regular affordable monthly payment to your Trustee, who distributes the money to your creditors, minus their fee for arranging and managing the Trust Deed.

However, in some circumstances, it may take you longer to complete the Trust Deed. E.g the duration of the Trust Deed term may be extended for a period of 12 months, meaning that the Trust Deed duration would then be 5 years. This would be discussed with you in more detail when you speak to our experienced debt advice team.

Call Trust Deed Scotland today and not only can we confirm how long a Trust Deed lasts in Scotland for you depending on your circumstances, but we can also find out how we can help you with your unaffordable debts and provide you with tailored debt advice.

What is a Trust Deed? A Trust Deed in Scotland is a legally binding, voluntary agreement between you and your creditors to repay your debts at an affordable level, typically over a period of 48 months.

Managed and administered only by a Trustee, at the end of the term, any unsecured debts left will be written off – allowing you to enjoy life after debt.

In order to qualify for a Trust Deed in Scotland, you will have at least £5,000 of unsecured debt.

Call Trust Deed Scotland today and find out how we can help you. We’ll be able to tell you what a Trust Deed is and the pros, cons, and alternatives formal Scottish debt solutions such as the Debt Arrangement Scheme.