Getting help with debt in Scotland – FAQs
Debt Advice in Scotland can come from the free debt advice sector, debt charities or you can investigate the services of a qualified, expert debt company such as Trust Deed Scotland®.
There are many pros and cons, and there is no harm in seeking advice from as many places as you feel comfortable with.
Getting help with debt in Scotland is the easy bit, having the courage to pick up the phone and do something about it can be the hardest part.
But, if you can find the strength to do so, you’ll find that getting help with debt was one of the best decisions you could have made in your life.
We often suggest having a look at our Debt Advice Reviews on Trustpilot as a good starting point. This is where many people like to share their experiences in their own words.
Our reviews are non-incentivised, so you can be sure that we’re asking our clients for reviews – good and bad and not offering a free voucher in exchange for reviewing a good review, which some companies may do.
As we understand how difficult it can be, getting help with debt – we want anyone asking for help with debts to feel comfortable. You can see our latest video guides for further information also.
Can I really write off up to 70% of my debt?
Formal debt solutions can help you manage and write off debt over a longer period of time. However, if you’re looking for breathing space and more time to think, a Statutory Moratorium can ease the pressure from your creditors for a period of 6 weeks. While not a debt solution, it would give you valuable time to consider your long term options.
Take these steps to find out how you could become debt free
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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.
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.
No setup fees are involved in setting up a Trust Deed. All administration fees are included in your monthly payments:
- 1) A fixed administration fee
- 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.
- Debt Arrangement Scheme (DAS)
- Sequestration (Scotland’s equivalent to bankruptcy)
- Minimal Asset Process (MAP route to Sequestration for those with no, or low income and assets)
Trust Deed Scotland® will undertake an assessment of your financial difficulties and provide you with tailored debt advice so that you can understand the options that are available for you.
In order for you to make an informed decision, it’s important that you receive balanced debt advice that gives you 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 experienced debt adviser. Call us on 0141 221 0999.
A Trust Deed is an effective statutory debt solution for residents of Scotland who have unaffordable debts.
If you qualify for a Trust Deed, you will pay a regular, affordable amount towards your debts and any debt left after the fixed term has ended will be written off.
The standard length for a Trust Deed term is 4 years, however, Trust Deeds may not be the best solution for everyone. There are other alternative ways of resolving personal debt issues in Scotland including the Debt Arrangement Scheme (DAS).
If you want to learn more about whether a Trust Deed is a good idea, call Trust Deed Scotland on 0141 221 0999 for tailored debt advice today.
When you enter into a Protected Trust Deed (or DAS) 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.
You can get help with your debts in Scotland from a number of places. Most of which will give you free advice at the very least. If you owe money to a number of creditors, you can make arrangements to repay your debts using formal government legislation.
One of the main purposes of any debt solution is to help you to regain control of your finances and reduce your outgoings to an affordable level. If it is an option for you, it may be possible to write to your creditors yourself and agree on a repayment plan.
However, if your debts have become unmanageable then a more formal debt solution may be required.
In Scotland, these solutions that use government-created legislation are known as a Scottish Trust Deed, Debt Arrangement Scheme and Sequestration. All of which stops creditors chasing you for payment, freezes interest and charges and reduce the amount that you repay to a realistic, yet affordable level.
Scottish Trust Deed – More correctly referred to as a Protected Trust Deed, this is set up by an insolvency practitioner and allows an individual to become debt free in a typical period of 48 months, and write off unaffordable debts. Find out more about the risks of Trust Deeds and benefits of Trust Deeds.
Debt Arrangement Scheme – In Scotland only, you can arrange a Debt Payment Programme under the Debt Arrangement Scheme. Find out more about the advantages of a DAS Scotland and the disadvantages of a DAS Scotland.
Sequestration – The term used to describe bankruptcy in Scotland. There are two types of personal bankruptcy in Scotland. Minimal Asset Process and Full Administration Process Sequestration. In this case, this will largely depend on your total debt level and your ability to repay those debts in a reasonable time and the assets that you may, or may not own.
When evaluating where to get help with your debts, you should ensure that you’re speaking to someone who is authorised by the Financial Conduct Authority. There are many companies out there offering debt advice, but not all of them are suitably qualified and may be quick to sell you a solution that is not in your best interest. Our FCA number is 820851.
Another consideration in your decision is to look for the reviews of that company online. Trust Deed Scotland® have thousands of five star reviews on Trustpilot.
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.
When choosing a Scottish debt solutions provider, firstly consider that Trust Deeds, Debt Arrangement Scheme and Sequestration are formal and legally-binding agreements between you and your creditors to pay back your debts over a period of time.
Depending on the solution that you elected to chose to clear your debts, these can only be set up by an Insolvency Practitioner, or a qualified Money Adviser (DAS).
There are many companies offering Debt Help in Scotland but many will act as intermediaries or lead generators who may typically pass your details onto someone else.
At Trust Deed Scotland® our team are based entirely in-house and we can guarantee that your details will not be passed onto anyone else. Your confidential information will remain safe and secure at all times.
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.
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.
When you’re looking into finding a Trust Deed company, with over 25,000 people helped in Scotland over a decade, we are in an excellent position to be able to help you apply for a Trust Deed and look forward to enjoying life after debt.
Although we’re known as Trust Deed Scotland® we’ve also helped thousands of people with alternative solutions such as the Debt Arrangement Scheme.
Ultimately, only a licenced insolvency practitioner can set up and maintain Trust Deeds on your behalf and that’s why having a Trust Deed company with an in-house team is beneficial for you as they will work together in order to make sure that you’re aware of the benefits and risks of the Trust Deed, but also that if it’s proposed, it’s in your best interest and likely to be successful.
We’re confident in our industry-leading positive outcomes and that if we apply for a Trust Deed on your behalf; it’s likely to be approved by your creditors. With 99% protection rate and 98% client satisfaction, these are indicators of our commitment to you. Our empathetic, non-judgemental advisors will always put you at the forefront of the decision-making process.
We do not operate call centres. Some Trust Deed companies use call centres based in England or Overseas. However, we’re proud to be owned and operated in Scotland and specialists in Scottish Debt Advice.
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.
When your Debt Payment Programme is approved, you are placed on the DAS register. This is coordinated and managed by the DAS administrator and is available to potential lenders who you may be looking to borrow from.
Credit rating agencies use the DAS Scotland register, besides other insolvency registers to add information on to your credit history, which then reports your credit score.
Therefore, your DAS is likely to negatively impact your ability to take out further credit. Like all other formal insolvency solutions in Scotland, the presence of the Debt Arrangement Scheme on your credit report will last for a minimum of 6 years.
However, it is also worth noting that while the Debt Arrangement Scheme can last a longer period of time as repayments can continue to up to approximately 10 years, some alternative solutions, such as Trust Deeds, will end typically after only 48 months.
While your credit score may be important for you later in life, if you’ve been missing payments and been served a default notice on those debts, your credit score is highly likely to have already been severely impacted.
How long does a DAS take to setup? The Debt Arrangement Scheme can take 5–6 weeks to set up. DAS is not insolvency, it is the only statutory debt management plan in the UK, however there are some procedures required. These include requesting up to date balances from creditors, preparing a proposal which is sent to creditors, and dealing with potential objections.
Using our Trust Deed Wizard® tool helps to speed up those administration processes and having an in-house team that handles the Debt Arrangement Scheme from initial enquiry, to DAS application and implementation helps to secure a Debt Arrangement Scheme quicker than most other approved DAS Money Advisors.
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.
48 months. 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.
How long does it take to set up DAS? If you choose to enter into a Debt Payment Programme under the Debt Arrangement Scheme Scotland, the first steps involve your Money Adviser proposing the DPP to your creditors. A DPP under DAS is proposed to creditors.
- Proposals are sent to all known creditors giving them 21 days to accept or reject the proposal
- If no creditors reject the proposal, then the DPP is approved automatically
- If creditors reject the proposal and they are owed up to 10% of the total debt, then the DPP application will be automatically approved
- If one or more creditors reject the proposal and they are owed more than 10% of the total debt, then the DPP can still be approved if the proposal is judged to be ‘fair and reasonable’ by the DAS Administrator (the Government agency responsible for DAS)
- If the DPP proposal is not approved, then you have a right of appeal, however, you may need to consider other solutions such as a Protected Trust Deed or Sequestration.
Trust Deed Scotland® have an experienced in-house team that work with our clients from initial enquiry for help with debt, through to implementation and maintenance of the solutions that we offer. This is important as it allows greater continuity between the advisor that you speak to and your dedicated money adviser thereafter. If you work with one organisation, who in turn works with other organisations within that chain, it will often take longer to set up a DAS as a result.
The Trust Deed Wizard® tool allows us to speed up the process of setting up as DAS, as it allows us search for your creditors, work out your disposable income, request up to date balances from the people that you owe money to, prepare your proposal which is then sent to creditors and dealing with potential objections.
According to official AiB data, there were 8,743 Trust Deeds registered in Scotland in 2019-20. This compares to 7,915 people using Trust Deeds in the previous year of 2018-19.
As a formal debt solution, the Protected Trust Deed remains the most commonly used formal method of repaying debt in Scotland.
Trust Deed Scotland® is the No.1 rated debt solutions company on Scotland based on our Trustpilot reviews and we’ve helped over 25,000 people use Trust Deeds to achieve life after debt.
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.
You don’t need to pay any setup fees upfront for your Trust Deed but there are costs involved in running a Trust Deed, such as:
1. A fixed administration fee.
2. A percentage fee based on the amount you’re paying back.
At the moment all Insolvency Practitioners charge fees and there’s no free service, however, Insolvency Practitioner fees are included in the monthly amount that you agree to pay back.
These Scottish Trust Deed fees are agreed by your creditors and put simply, they are absorbed by the creditors as they are writing off a proportion of your debt. The purpose of the Trust Deed is to allow you an opportunity to get out of debt, and reduce the amount you pay each month towards debt payments. You can also find out more about how your monthly Trust Deed payment is calculated.
Your DPP payments will be calculated based on what you can afford to pay after all of your essential expenditures have been paid.
The monthly costs of administering the scheme are borne by the creditors i.e. from every £ received into the scheme, 22p is used to pay these costs; this 22p is split between the DAS Administrator (2p) and the Money Adviser (20p).
There may also be a payment made to the Payment Distributor (PD) and, if so, this would result in the Money Adviser’s fee being reduced by the same amount as paid to the PD. The remaining amounts are distributed amongst all creditors on a pro-rata basis and a successfully completed DPP deems all debts to be repaid in full.
This is the same for all individuals whether they use an insolvency practitioner/private sector firm (e.g. Harper McDermott Ltd) or a public sector organisation (e.g. CAB or local authority Money Adviser)
There is a charge of £150 to go through the full administration Sequestration process in Scotland. You might be able to pay this in instalments. The Minimal Asset Process route to Sequestration has a reduced fee of £50. If you are in receipt of certain prescribed social security benefits then there is no application fee payable.
A Trustee’s fees and costs are met from the funds received into the bankruptcy through the realisation of assets and your monthly income contribution; there are no payments due by you over and above the agreed contributions from your income and/or assets.
For further information on all formal debt solutions fees in Scotland, you can call us on 0141 221 0999.
Trust Deeds are a form of personal insolvency in Scotland. They were introduced as a formal debt management solution for Scottish residents and have been revised a number of times since they were first introduced in Scotland.
Every year, thousands of people use Trust Deeds to get themselves out of debt alongside other formal debt solutions known as the Debt Arrangement Scheme and our equivalent of bankruptcy, known as Sequestration.
In order to qualify, your unsecured debts need to outweigh the value of your assets, such as a house or vehicle(s) and you would typically owe a minimum of £5,000. While this is the minimum, there is no recognised maximum amount with some Trust Deeds becoming put in place with over £40,000 of unsecured debts.
Unsecured debts typically include companies that you owe money to such as credit card debts, personal loans and store cards.
Benefits of Trust Deeds
- Debt payments are rearranged over a period of 4 years so that they are affordable for you. After this time any remaining debt is written off.
- Once your Trust Deed is protected, your creditors won’t chase you for payment or add more interest and charges to your debts, and they can’t take any court action.
- You get to protect your home and car.
Risks of Trust Deeds
- Your credit rating will be affected for six years, starting from the date the arrangement is agreed.
- There’s a risk of sequestration if your Trust Deed fails.
- Trust Deeds may affect the terms of your employment for certain occupations. If you’re concerned about this you should check your contract or speak to your human resources department.
When people think of insolvency, bankruptcy or sequestration there is sometimes a stigma attached to these words which can deter an individual from seeking help with debt in Scotland. However, the reality is that many more people every year are using Trust Deeds and the alternative Scottish debt solutions to get their finances back to a manageable level
We have 3,000 debt advice reviews, and this can be a good starting point to find out how other Trust Deed Scotland clients found the process in their own words, which helps to shows that Trust Deeds are an insolvency product which not only helps people with their debt but furthermore allows them to successfully get their lives back on track.
In Scotland, Trust Deeds are a valuable Government created debt relief tool that offers a way to manage your unaffordable debt.
You can reduce your monthly debt payments down to an affordable level and become debt free in as little as 48 months. You must have a minimum of £5,000 of unsecured debt to qualify, but you can apply for a Trust Deed if you have over £50,000 of unsecured debt also.
If you qualify, a Trust Deed is right for you depending on your personal circumstances and ultimately you should be given qualified debt advice to explain to you the advantages of Trust Deeds and the disadvantages of Trust Deeds and there are alternative debt solutions in Scotland that may be more suitable for you such as the Debt Arrangement Scheme.
You should never feel pushed into taking a Trust Deed, or indeed any other type of debt management product including debt consolidation loans.
When asking yourself the question Is a Trust Deed right for me, only you can make that decision after receiving balanced and transparent debt advice from an FCA authorised company. Call us on 0141 221 0999 for free confidential help, or try our Trust Deed Wizard® tool now.
IVAs, also known as Individual Voluntary Arrangements are the English, Welsh and Northern Irish equivalent of Trust Deeds in Scotland but an IVA is not exactly the same as a Trust Deed.
The length of the process is the main difference, with a Trust Deed typically lasting 4 years and an IVA lasting 5 years. Sometimes you may read about a Scottish IVA, but this is a term generally used to describe a Trust Deed.
Another difference is the amount of debt that can be included with a Trust Deed, you would typically have £5,000 of unsecured debt, and with an IVA, you can apply for an IVA with £6,000 of unsecured debt.
While an IVA may not technically be the same as a Trust Deed, there are other similarities and differences between IVAs and Trust Deeds. There are other solutions in Scotland that vary from the rest of the UK solutions including:
the Debt Arrangement Scheme (Scotland) – DMP: Debt Management Programme (England, Wales & Northern Ireland)
Minimal Asset Process (Scotland) – DRO: Debt Relief Order (England, Wales & Northern Ireland)
Sequestration (Scotland) – Bankruptcy (England, Wales & Northern Ireland)
A key difference between the Debt Arrangement Scheme and a Debt Management Programme is that DAS allows interest and charges to be legally frozen and the DMP is a voluntary agreement between an individual and their creditors. It’s another government-created, formal solution only available to residents in Scotland, and there are plans to create a similar agreement for English, Welsh and Northern Irish residents in due course.
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.
When you need debt help in Scotland, you should feel confident that the organisation that you’re speaking to is genuine.
Trust Deed Scotland® are aware of a number of ‘clone firms’ who are using altered versions of our name such as ‘Scottish Trust Deeds’ or ‘Life After Debt‘ and other variations of our trademarked name, and campaign awareness slogans to convince people that they’re the official Trust Deed Scotland®
They’re not genuine. They’re often not even authorised by the FCA to give advice.
Once a clone firm or scam website has your data, they could:
- Sell it to other companies
- Try to access your bank account or other credit products
- Try to fraudulently take out credit in your name
Trust Deed Scotland® will never…
- Charge you for debt advice
- Contact you, unless you contact us first
- Refer you onto anyone else
We understand the enormous stress that unaffordable debt causes people and that they simply don’t need further anxiety caused by poor, unregulated and sales-driven advice.
Find out more about Trust Deed Scotland® and here are our top ten tips to help you choose the correct firm, making sure you’re speaking to a legitimate debt advisory firm.
1️. Are they FCA regulated?
Our FCA number is 820851.
2. How many people have they helped?
We have helped over 25,000 people.
3. How many years have they been trading?
We were established in 2009.
4. Do they sell details onto other companies?
We never sell or mishandle your details, our team are based exclusively in-house.
5. Did they cold call or send unsolicited text messages?
We’re here for our clients, only when they need us.
6. Are they based in Scotland?
We are 100% owned and operated in Scotland.
7. Are they based in a call centre?
We don’t operate call centres, either here in Scotland, or overseas like some.
8. Are they trying to force people into a solution?
We explain the benefits & risks of all available solutions and let our clients make the decision in their own time.
9. What’s their creditor approval % rate?
99% of Trust Deed Scotland® clients’ proposals are approved by creditors.
10. Do they charge setup fees?
We never have and never will, charge setup fees or ask people to pay for debt advice.
Length – Trust Deeds last for 4 years. After this time, any remaining unaffordable debt is paid off. With the Debt Arrangement Scheme, they last until all your debt is repaid, this can be up to 12 years.
Amount of debt – to qualify for Scottish Trust Deeds, you must owe at least £5,000 of unsecured debt. For the Debt Arrangement Scheme in Scotland, there is no minimum debt level.
Assets – A Debt Arrangement Scheme does not involve any assets.
There are other differences and alternative Scottish debt solutions, you should always get debt advice tailored to your own circumstances, as all cases are unique depending on your situation and affordability.
For a business Debt Arrangement Scheme, you can include debts arrears from:
✓ Business rates, The following HMRC debts: ✓ PAYE ✓ VAT ✓ National Insurance ✓ Self Assessment Income Tax ✓ Rent ✓ Utilities ✓ Trade Suppliers
As well as a Business DAS, you may qualify for other forms of self-employed debt help.
A Debt Arrangement Scheme can include most unsecured debts, including:
✓ Credit Cards ✓ Store Cards ✓ Personal Loans ✓ Overdrafts ✓ Payday Loans ✓ Council Tax Arrears ✓ Utility Bill Arrears ✓ Shopping Catalogues ✓ Credit Unions ✓ HMRC
The following secured debts but only the arrears – this is optional:
✓ Mortgage Arrears, which are missed mortgage payments ✓ Rent Arrears, which are missed rent payments ✓ Car Finance Arrears, which are missed payments on your car, such as with an HP agreement
The following cannot be included in a DAS: Student Loans. Court Fines. CSA / Child Maintenance Arrears
Find out more about Trust Deeds too as there variations in the types of debt that can be included in a DAS.
Almost all unsecured debts can be included in Trust Deeds such as:
- Personal Loans
- Payday Loans
- Credit Cards
- Council Tax Arrears
- Store Cards
- 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.
A Scottish Trust Deed can include most unsecured debts, including:
- Unsecured Loans
- Credit Cards
- Store Cards
- Council Tax Arrears
- Payday Loans
- Credit Unions
- Mortgage shortfalls for previous address
- Car finance shortfalls for a previous vehicle
- HMRC Bills (self-employed)
Unfortunately, Student loans, local authority parking fines and court fines can’t be included in a Protected Trust Deed. If you have a guarantor loan, you can include this personal loan type in the Scottish Trust Deed, but it will impact the guarantor whoo would then become liable for the payment of that debt.
We’ve advised over 25,000 people, spanning over a decade.
In their own words, our customers speak about their own experiences and how we’ve changed their lives for the better.
Apply for a trust deed today or for more information, call 0141 221 0999.
If you are discharged from your debt you legally no longer owe this debt and can’t be pursued for it.
What does life after debt look like? When we talk about life after debt, we’re referring to the period after you’ve successfully completed the solution that you have chosen to clear your debts.
You can find out more about what is life after debt which describes in greater detail what life after debt looks like for our clients and other information such as what happens when a Trust Deed arrangement is complete alongside other associated questions including how to rebuild your credit.
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.
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.
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.
You shouldn’t take out any credit while in the Trust Deed. If you do, you will still be liable for the debt and can’t add it into the Trust Deed at a later date.
If there’s a change in your finances whilst in your Trust Deed, let your Trustee know and they will help you complete your Trust Deed.
If you don’t speak to your Trustee and fail to make the agreed monthly payments you will be in breach of the terms of your Trust Deed and further action could be taken against you.
For example, your IP can take further action such as instructing an earnings deduction. They can also petition for your Sequestration or may decide to resign from the Trust Deed which may result in your Trust Deed failing and creditors pursuing you once again.
If your circumstances change when you’re in a Trust Deed, the most important thing to remember is that you tell your Trustee of any financial changes that will prevent you from making the agreed Trust Deed payment amounts immediately.
The amount that you repay has been agreed with your creditors but ultimately, your Trustee is there for you and to help make sure that the Trust Deed doesn’t fail.
Your Trustee will work with you in order to help you complete the Trust Deed term and if your circumstances have changed while in a Trust Deed then a variation in the Trust Deed is likely to be the first step if you were to lose your job for example.
Trust Deeds, the Debt Arrangement Scheme and Sequestration / Minimal Asset Process are all formal debt relief tools in Scotland designed to help get you out of debt depending on your circumstances, but there is flexibility built within them, to deal with situations that may arise from time-to-time.
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.
A Trustee is a person who takes responsibility for managing money or assets in an official capacity. In the context of Trust Deeds, a licensed Insolvency Practitioner will take on the role of Trustee, and they will administer the Scottish Trust Deed on your behalf.
The Trustee will become the liaison between you and your creditors. As long as you make the agree reduced monthly payments, your creditors can no longer call you up, email you or contact you directly to chase debts.
In a Debt Arrangement Scheme, the equivalent role is performed by a fully trained and approved Money Adviser.
Low and Grow DAS is a formal debt solution introduced in January 2021 that may help Scottish residents who have experienced a loss of income due to the Coronavirus pandemic.
The solution may appeal to those who are in a position to repay their debt over a longer period of time but require a short term solution in the intermediate period before their regular income returns to normal may be eligible to apply for a Low and Grow DAS.
The benefits and risks are the same as any other debt payment programme (DPP) undertaken as part of the Debt Arrangement Scheme.
When a person repays their debts through DAS, interest and contractual charges are frozen. DAS lifts wage arrestments; stops court action including Sequestration (bankruptcy in Scotland) and requires one monthly payment that is distributed to all creditors on their behalf.
When applying for a DPP using the Low and Grow process, it is recommended that a minimum of 5% of the overall debt is paid for the duration of the discretionary condition period of lower payments, or a minimum of £35 per month, whichever is lower.
Persistent Debt in a term used by credit card lenders when you pay more in interest and charges on your credit card than you’ve repaid of the amount borrowed. If you’ve received a letter from your bank telling you that have a ‘persistent debt’, you may feel upset, even if you don’t think you’re ‘in debt’ at that moment.
This persistent debt calculation is based on your activity for the last 18 months. Having a ‘persistent debt’ could make it more likely that you get into difficulty with debt in the future.
Minimum payments tend to only cover the interest and charges on the debt, or at most a very small amount of the balance. By paying more each month, you could reduce your credit card balance quicker and move your account out of its persistent debt status. By doing so, you could also save yourself money because you’ll pay less in interest.
If you are worried about persistent debt, or credit card debts, get in touch with Trust Deed Scotland today on 0141 221 0999.
The basic criteria for a Protected Trust Deed include:
Scottish Residence – If you live in Scotland or you have lived here in the past year.
Affordability – Demonstrate that you cannot afford to pay your debts in a reasonable period of time and that you can afford a regular contribution over the term of your Trust Deed, typically 48 months.
Total Unsecured Debt – You would typically have unsecured debts of at least £5,000 to qualify for a Trust Deed.
Property – How much equity you have in the property.
If the lenders that you owe monies to agree your proposals for a Trust Deed it becomes protected. Trust Deeds can only be administered by a licensed Insolvency Practitioner.
If for whatever reason your Trust Deed fails, you could face Sequestration and interest that was previously frozen could be re-applied to your debts. However, this would be fully examined prior to applying for the Protected Trust Deed and you could also pursue other alternatives such as the Debt Arrangement Scheme. The reality for some people is that Sequestration itself, or Minimal Asset Process is a suitable way of dealing with their debts, despite the attached stigma of ‘bankruptcy‘.
Which Scottish debt solution is right for you may depend on a number of factors. As always, these depend on your unique situation.
- Your personal circumstances.
- What debts you have – Unsecured & Secured. Priority and Non-Priority.
- Your available income.
- The assets that you own.
- The impact on your credit rating.
Student loans can’t be included in a Scottish Trust Deed but most other unsecured loans can be considered.
Special consideration should be given to the inclusion of a guarantor loan due to the fact that the person who acted as a guarantor on your behalf becomes liable for the debt. However, you may still be able to dispute their liability depending on the lending circumstances. Call us on 0141 221 0999 for advice.
Other excluded debt types include CSA/Child Maintenance arrears and court fines.
A secured debt is any debt that is secured against an item. The company lending you the money will use your asset as security if you can’t repay your loan, which means your lender has the right to repossess your home or car (whatever asset was used to secure the loan.)
Unsecured debt is when you borrow money from a lender and agree to make regular payments until it’s paid. This type of debt, usually borrowed as a loan, isn’t secured on any assets and so the interest rates tend to be higher.
When it comes to repaying debts, many unsecured loan debts can be included in either a Trust Deed or DAS, however, there are some considerations.
Student loan – Unsecured debt but can’t be included in a Trust Deed or DAS.
Guarantor loan – Unsecured debt, can be included in a Trust Deed or DAS but will mean that the lender will almost certainly pursue the person who acted as a guarantor on your behalf for repayment of the debt.
The difference between a Trust Deed and a Deed of Trust is quite significant.
A Trust Deed is an alternative to bankruptcy in Scotland and involves a professional overseeing your repayment of debt over a certain amount of time to your creditors.
A Deed of Trust meanwhile, is a legal document most commonly related to the ownership of property. It also involves a Trustee who manages how property is really owned, enabling your percentage of ownership to be protected, even when you are not listed in the land registry as the owner.
For more information, we have a whole info hub article on the differences between Trust Deeds and a Deed of Trust.
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.
£5,000 of unsecured debt is the minimum debt level required to qualify for a Trust Deed.
You must also be able to pay a monthly contribution based on having enough expendable income. Typically this is calculated by subtracting your expenditure from your total income leaving an amount often referred to as disposable income.
While a Trust Deed will allow you to write off an element of your unaffordable debt, you may also be eligible for the Debt Arrangement Scheme (DAS) or other Scottish Debt Solutions. Depending on how much you owe, and how much you can afford to repay, one of these alternatives may be just as effective as a Protected Trust Deed.
A Protected Trust Deed remains on your credit file for six years from its start date, alongside previous default notices, and before you’re discharged you won’t be able to obtain credit.
When the Protected Trust Deed term is complete, you’ll find that lenders are reluctant to lend money to you until you build up a better credit score, and demonstrate that you can handle your finances again.
Inform the Credit Reference Agencies
Once you’ve been discharged from the Trust Deed, you should let the credit reference agencies know as soon as possible.
Your trustee will issue a Discharge Certificate which should be copied and sent to the three main agencies so they can log it on your file.
Check that the information held about you is correct
Credit reference agencies are used by lenders as part of their due diligence procedures, and the information held about you will be a major factor in their willingness to lend.
This is why it is advantageous to check at regular intervals that the information on your credit file is correct once the Trust Deed has ended.
If creditors have failed to inform the agencies that you’ve repaid certain debts, this will continue to harm your credit rating.
So if you find an error, you should contact the creditor concerned and request that they inform the credit reference agency. The debt should then be marked as ‘satisfied’ on your credit file.
Use credit to your advantage
Credit can be used to boost your credit score once the Trust Deed term is complete. If you don’t have any lines of credit in the long-term, it can have a detrimental effect on your credit rating.
Lenders like to see that you’re responsible with money, and a great way to illustrate that you a responsible borrower is by using ‘credit builder’ credit cards.
A number of specialist lenders offer these credit cards for people who are trying to rebuild their credit file following a period of debt. As long as you meet all the required repayments in full and on time, your credit rating will be boosted over time.
If you fail to make a single repayment, however, your credit file will be further damaged and you’ll find it significantly more difficult to borrow in the future. Additionally, it’s better to use this type of card for small purchases which can be repaid easily in full, rather than large items, as the interest rates are extremely high if you default.
Lenders typically look at the recent credit activity when they check a credit file, and over a period of time time, repaying the balance on your card each month will work in your favour, as it shows that you can be trusted again as a borrower.
Additionally, your lender may be inclined to reduce the rate of interest attached to your card, if you repay in full over the long-term.
Make sure you’re on the electoral register
Being on the register to vote in Scotland confirms to lenders that you have a permanent address, which will generally boost your chances of being offered credit when you look to rebuild your credit score.
You are discharged from Sequestration typically 12 months after you formally entered the process. For Minimal Asset Process, you are discharged after a period of 6 months.
However, this may not be the end of the process because the terms of your Sequestration may include that you have to make a contribution to your estate for a period of 48 months.
If you’re in employment, you may be obliged to make a contribution to paying back your creditors for a period of 4 years, which will continue for a period after being discharged from Sequestration.
Therefore, while Sequestration gives you a strong chance to write off unaffordable debt and get your life back on track, you should seek expert Debt Advice as Trust Deeds and the Debt Arrangement Scheme might be a better solution for you depending on your circumstances.
Not only do we give advice on Scottish debt solutions in Scotland but we also implement the solutions on your behalf. This means that you remain with us from the initial enquiry, during the process and thereafter. This continuity in service means that you’re not passed onto numerous companies during the process.
We’ve helped over 25,000 people in Scotland get their finances in shape, and have a 5/5 rating on Trustpilot based on thousands of trust deed reviews. We’re proud to say that over a decade, we’ve become Scotland’s No.1 Trust Deed Specialists.
Trust Deed Scotland® explain financial matters in plain English and will never sell your details for marketing purposes. Our service is non-judgemental, confidential and there’s no obligation to agree to anything after talking to us.
A Trust Deed is available to people who have been living in Scotland for more than six months and who have total unsecured debts of £5,000 or more.
There are many factors that can influence your eligibility for a Protected Trust Deed, including:
- Homeowner equity
- How much you can afford to pay
- Your debt level
- Who your debts are with
You can qualify as a homeowner (depending on your equity, don’t worry we will check this as part of the process), a private tenant, a council tenant, or someone who lives with their parents. If you own your home, your Trust Deed Scotland® advisor will explain to you how you can protect it.
You are eligible for a DAS (Debt Arrangement Scheme) if you are a resident of Scotland and also have money left over at the end of each month (after you’ve paid your household costs, like rent/mortgage/accommodation, food shopping, and utility bills) and you can clear your debts in a reasonable amount of time.
We will work with you to find out if DAS is the best debt solution for you, based on your situation.
Your credit rating will be affected, but in our experience, if you have overextended yourself – even if you haven’t missed payments, it may have already been damaged.
Once your Trust Deed agreement has ended, you can start rebuilding your credit rating. A default notice will remain on your credit record for six years after it’s registered. The average Trust Deed lasts four years, so it’ll be on your credit record for two years after it’s complete.
In our experience, most people don’t want to live under the burden of debt after completing a Trust Deed.
Certain employers may not allow any form of insolvency, particularly if you work in the finance industry. We can give you advice on this during a phone call.
When you sign a credit agreement, because you have done so in your own name; your spouse or partner is not responsible to pay your debts. If you start a Trust Deed, your partner or spouse will not be directly involved with the agreement.
They will not be forced to help you repay your debt and your creditors are forbidden from revealing details of the debt to your partner/spouse unless given clear permission to do so by you.
Much will depend on your income and whether you can convince a mortgage lender that you’re a responsible borrower. We recommend that you talk to a financial advisor for more information about this
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.
Your assets will be safe if you stick to the Trust Deed’s terms.
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.
It is possible that being sequestrated could affect your existing employment and prospects for future employment.
If you are in any doubt then you should review your employment contract and/or speak confidentially to your HR department.
If you are working in the financial services industry, police, armed forces, prison service, licensed HGV driver, Chartered Accountant or are a member of any recognised professional body then you should take further advice, this will be discussed by your adviser prior to you making an application for bankruptcy. This list of affected jobs/careers is not exhaustive.
If you’re worried about whether Sequestration would affect your job call us on 0141 221 0999, find out more about all debt solutions available in Scotland.