We often receive calls at Trust Deed Scotland from people asking questions about Trust Deeds.
We’ve compiled a list of some of the most commonly asked questions so that you can learn more about the process.
1. How do I set up a Trust Deed?
First, enter your details onto the website to arrange a call back, or call the office to arrange a free appointment with a qualified debt advisor.
The advisor will explain all the options available to you and you can then make an informed decision on whether to proceed with a Trust Deed or another solution.
If you decide you would like to proceed with a Trust Deed, we will draft your case as soon as we have received the necessary documentation.
Your advisor will give you a checklist of the necessary information. Once your case is drafted, you will receive a call from the insolvency practitioner to confirm the details in your paperwork are correct.
After this, your advisor will arrange a final meeting with you to finalise the paperwork and answer any questions you may have. Finally, they will help you set up your first contribution payment and once this is done you can stop paying your creditors directly.
Always check with your insolvency practitioner to make sure everything is finalised and you are at the stage where you can cancel payments to your creditors.
2. What if I own my own home?
You can enter a Trust Deed if you own your own home or if you are a tenant, or living with parents or family.
At the beginning of the process, you will be given the opportunity to complete a 1b form which ensures your property is protected, provided you meet the terms of your Trust Deed.
3. Will it cover all my debts?
It would cover all unsecured finances, excluding student loans or any charges incurred due to fraudulent benefit claims or court fines accrued relating to this.
There may be some typical exclusions or grey areas such as a guarantor loan. However, these would be investigated and our debt experts would ensure that any doubt would be immediately resolved, or explained.
Remember too that other solutions exist such as Debt Arrangement Scheme.
4. Will I need to have a credit check done?
No, you will not need to have a credit check carried out but a credit check could help verify you creditors and the amounts you owe.
This is a good idea if you have additional debts you may have forgotten about or are unsure about who you owe money to.
5. Is a Trust Deed the same as bankruptcy?
No, Trust Deeds and bankruptcy, (called sequestration in Scotland), are not the same.
One of the major differences between the two is, if you are a homeowner, you can keep your own home in a Trust Deed but this isn’t always possible with bankruptcy.
6. Do I have to tell my family or friends?
As long as you have individual debts, (they aren’t joint with anyone), you do not need to tell anyone at all if you don’t want to.
We will never disclose your status to anyone and all correspondence will be discrete.
7. What if I am self-employed?
You can apply for a Trust Deed if you are self-employed as long as you can provide evidence of income, accounts and invoices.
8. What if I stop paying my agreed monthly contribution?
If there is a valid reason you cannot pay your Trust Deed contribution, contact your insolvency practitioner immediately.
It is possible to arrange a payment holiday for extenuating circumstances.
If you stop paying your agreed contribution without good reason or without contacting your insolvency practitioner, they may discharge themselves from your Trust Deed, meaning your creditors will resume chasing you for the full outstanding balances, they may request a wage arrestment against you or you could be made bankrupt.
9. Will my credit rating be affected?
Yes, your credit will be affected but if a Trust Deed is the best option for you, it is best to take charge of your finances as soon as you can. If you have not defaulted on any payments but have a high level of unsecured debt, you will find yourself in the position where lenders will not consider giving you any more credit, even if you have a high credit score.
This is because the acceptance process is means-tested and even if you have never missed a payment, there will come a time when what you owe exceeds the realistic probability that you can pay it back based on your income and expenditure. If you have already defaulted on payments to your creditors, your credit will already be negatively affected and each default will show on your credit file for 6 years. Once you have been discharged from your Trust Deed, you can rebuild your credit.
10. What would a Trust Deed mean for my future?
You would be debt free and able to rebuild your credit score.
This would allow you to apply for mortgages, higher purchase loans to buy a car and credit cards.
These are things you would never be able to do with poor credit. You will also be free from the stress of having a lot of debt and having multiple creditors chase you.