Is A Trust Deed A Good Idea?
Trust Deeds help thousands of people in Scotland manage their unaffordable debts and reduce their monthly debt repayments to an amount that they can afford to repay on a regular basis.
However, Trust Deeds aren’t a solution suitable for everyone and there are alternative debt management solutions in Scotland that can be just as effective or better.
The decision to proceed with a Trust Deed is based on you, your affordability and what is best for your long-term financial stability, rather than whether a Trust Deed is a good idea or not.
Get in touch with Trust Deed Scotland® today and you’ll receive a personalised illustration.
Affordable Monthly Repayments?
The solution(s) open to you will largely depend on how much debt you have and how much you can afford to repay on a regular basis.
If you have already defaulted on debts such as credit cards and loans, you may be familiar with income and expenditure guidelines, or budget sheets sent to you from your creditors. The same guidelines are largely available from debt charities and Money Helper websites.
These budget sheets will ask you to write down a list of your income and expenditure details and what you usually spend on priority bills such as mortgage/rent and council tax. These will also include what you spend on travel expenses per month, clothing and many other expenses
Whatever monies are leftover is known as your disposable income. These are the funds that you have leftover to repay your debts.
A debt charity service or a company such as Trust Deed Scotland® have the experience of advising on the acceptability criteria for these guidelines for these and can work with you to find out any hidden expenses that you may not take into account, and establish what your true disposable income is.
This is important because if you are to enter a Trust Deed, or any other form of debt management solution, you will be making a commitment to repay a regular amount over a number of years.
Where you fail to keep up the repayment of your Trust Deed, you could end up with a failed Trust Deed, ultimately leading to you being potentially sequestrated. More importantly for you, you would be no better off than when you first sought advice.
This is where the experience and trustworthiness of your debt expert is important. Trust Deed Scotland® have advised over 25,000 people since 2009 and have gathered thousands of five-star Trust Deed reviews on TrustPilot.
We pride ourselves on our commitment to compliance and training. We genuinely want the best outcome for our clients and always have their best interests at heart.
Alternatives to a Trust Deed?
The Debt Arrangement Scheme is a popular alternative debt solution available to residents of Scotland. It’s a statutory debt repayment plan which also uses legislation to allow you to freeze interest and charges and bring your debts under control.
There are advantages to the Debt Arrangement Scheme:
- Personalised debt repayment plan based on your situation
- Monthly payments will be based on what you can afford
- Interest on your debt will be frozen
- Protection against creditor action.
- Assets protected meaning you will not be asked to sell your house, or your car.
- Your Money advisor deals with creditors on your behalf.
There are also disadvantages of the Debt Arrangement Scheme:
- May last longer than the typical 48 months offered by a Trust Deed.
- Subject to certain conditions. Includes making all payments towards your Debt Payment Plan and paying your monthly expenditure and bills when they fall due. If you fail to make payments, your plan could be revoked.
- Unable to obtain credit or use an overdraft while you are in a Debt Payment Plan.
- Credit rating will be affected.
Depending on the severity of your situation, Sequestration may be the best way for you to resolve your debts. On the other hand, a debt consolidation loan or negotiating debt repayment plans directly with your creditors may also be better for you.
Refer to our article regarding is a DAS worth it for further information on this solution.
Advantages of Trust Deeds?
There are many advantages of Trust Deeds, a few of which are:
- Pay back what you can afford.
- Your Trustee will deal with creditors on your behalf.
- You will be protected against creditor action.
- On the successful conclusion of a Trust Deed, your remaining debt will be written off.
- If you own assets such as a property, you agree with your Trustee in advance whether the Trust Deed affects them.
- You may be able to remain as the director of a Limited Company.
Disadvantages of Trust Deeds?
- Your credit file will be updated to reflect that you have signed a Trust Deed. This information will remain on your credit file for six years.
- As a result of this, you may find it difficult to get credit for a period after your Trust Deed is finalised.
- For a Trust Deed to become protected, you must convey all your assets to your Trustee. That includes any property that you own. In certain circumstances, it may be possible to exclude your property, but you need to get clear advice on this when you speak to a debt advisor.
- As mentioned earlier, failure to keep up with repayment of your Trust Deed could result in you being sequestrated. Therefore, it is important that you re fully aware of the Pros and Cons of a Trust Deed and that the amount you repay is realistic for all parties.
Can You Have 2 Trust Deeds?
If you have already been through the process and came out the other end then yes, you can get a Trust Deed twice.
If you’re currently in a Trust Deed with a different company then you may also be able to get a second Trust Deed but there are some conditions attached.
You can find out more about the process involved in our article on how to get a Trust Deed twice.
How to Get Trust Deed Advice?
If you really want to know if a Trust Deed is a good idea, seek tailored debt advice today. We’re open from 9am to 8pm during the week, and selectively during the weekends.
If you do something about your debt today, you don’t need to worry about it tomorrow.
Reputable debt advice companies and debt charities are regulated by governing bodies, this should help ensure that you are not ‘sold’ into a Trust Deed and that you are fully aware of the pros, cons and alternatives.
Remember, a Trust Deed may not be for you, but that doesn’t mean that you are beyond help. The sooner that you seek help, the sooner you can begin to understand what options are open to you.
You can also learn more a similar question of Is DAS Worth It? which investigates the Debt Arrangement Scheme in a similar fashion to the article above of the merits of whether a Trust Deed is a good idea.