DEBT SOLUTIONS

Trust Deed – Scotland

DEBT SOLUTIONS

Trust Deed – Scotland

What is a Trust Deed in Scotland?

A Trust Deed is a debt solution in Scotland that reduces unaffordable debt repayments down to one single monthly payment

A Protected Trust Deed is a formal agreement between an individual and their creditors. It is only available to Scottish residents and will generally last for a period of four years, although a longer period is sometimes considered.

All Scottish Trust Deeds are legally binding and are designed to help those with a debt level over £5,000 and are struggling to repay their debts. It can only be done through a licensed Insolvency Practitioner (IP), who will act as the Trustee for the arrangement.

The individual makes a single monthly payment based on what they can afford and any debt remaining at the end of the period is written off (subject to exceptions). Individuals are protected from any legal action from creditors and any interest or fees on the debts included.

It’s important to remember that this solution is only available to Scottish Residents. If you are based in England or Wales, you may be better suited to other debt solutions such as an IVA or a Debt Management Plan.

 

What debts can be included in a Trust Deed?

Protected Trust Deeds in Scotland are designed to take on unsecured debts. These include:

  • Credit/store cards
  • Overdrafts
  • Catalogues
  • Payday or bank loans
  • Council Tax arrears
  • Utility bills

How does a Trust Deed work?

Step 1

The first step is to contact an Insolvency Practitioner to discuss your situation. They will then act as your Trustee if you decide to proceed.

They will discuss your financial circumstances and work with you to create a realistic budget. This will allow them to calculate how much you can reasonably afford to pay each month towards your debts.

Should you decide to go ahead with a Trust Deed, this payment will replace all your existing unsecured debt repayments.

If you don’t meet the requirements, or you feel this is not for you; a Debt Arrangement Scheme (DAS) or Sequestration (Bankruptcy in Scotland) might be an alternative solution.

You can check if a Trust Deed is an affordable solution for you by using our Debt Assistant. It will show you different potential minimum monthly payments for each solution based on your debt level.

The results shown are only indicative. Contact details will be requested to discuss your circumstances and conduct a full income and expenditure to help provide the best advice possible.

Step 2

The next step is to sign your Trust Deed. Once you have done this, your Trustee will send a proposal to your creditors, detailing how much you propose to pay and how much creditor can expect to receive over the period. They will also detail how any assets, if you have any, will be dealt with.

Your Trust Deed will then be advertised on the Register of Insolvencies. Creditors then have a five-week period to review the proposal and either accept or object.

If there are no objections, or any objections received do not hold the majority of your debts, then your Trust Deed will become protected. If no creditors respond, then it is considered that they have agreed to the proposal.

Should sufficient objections be received, then the Trust Deed will fail. In this instance, your Trustee would resign and you would be given further advice.

Step 3

Now your Trust Deed is protected, your creditors cannot take any action against you to recover the debts. All you need to do is keep up with your payments.

If you are a homeowner, the level of equity (the difference between the value of your home and how much you owe to your mortgage provider) is determined in the beginning. If you have high equity, then this must be released to your Trustee to be paid to your creditors.

An advisor will discuss the different ways to release equity with you, ensuring you have all the correct information before you even put your name on the dotted line. Each case is different, but it is highly unlikely that the Trustee will force you to sell your home.

Step 4

Once all your payments have been made and the term has been completed (generally over 4 years), you will then be discharged.

You will be sent a certificate confirming this and all the creditors included will be required to write off any remaining balance.

This means they will no longer be able to pursue you for any of the debts and you will be able to have a fresh start.

Advantages of a Trust Deed

  • Payments are based on what you can afford to pay in your circumstances
  • Your creditors are contacted by the Trustee, meaning you won’t have the pressure of unwanted phone-calls and letters
  • The IP will deal with all of the administration work
  • Once your Trust Deed is protected, creditors are completely bound to the terms of the agreement. They cannot take any legal action against you.
  • You can regain control of your finances
  • Whilst there are fees involved in a Trust Deed, these are deducted from your monthly payments or, if appropriate, the sale of an asset. There are no up-front fees.
  • Your liability for any remaining balances of debts included are written off at the end of a Trust Deed.

Disadvantages of a Trust Deed

  • If you are a homeowner, any equity in your property must be released to be paid to your creditors. This can be done without selling your home, such as re-mortgaging. If equity cannot be released, your Trust Deed may be extended.
  • Creditors can object to a Trust Deed becoming protected.
  • There are certain professional bodies which prevent members from signing a Trust Deed.
  • Obtaining credit in the future may become difficult. Credit reference agencies will measure the level of risk based on your financial history, which might include the Trust Deed.

Why Choose Us For Trust Deeds?

We understand that debt can become consuming, and if your debt is becoming the elephant in the room it’s not always easy to know where to turn.

Here at Carrington Dean we will always do our utmost to help you, regardless of your circumstances. Our friendly advisors work endlessly to give the best advice possible to those in need of financial help or simply want to know more.

We are experts in our field and have become well-established as Scotland’s leading Trust Deed company. 99% of our Trust Deeds become protected, giving thousands of people that freedom from creditors taking any action against them.

Frequently Asked Questions

Your Trustee will work with your creditors on your behalf, so once your Trust Deed is protected calls and letters from creditors should stop. This will give you relief of having to deal with them on your own.

If any of your creditors continue to contact you, you can refer them to your Trustee who will handle this for you on your behalf.

All Trust Deeds are legally binding, which means you cannot cancel it once it has been signed. Understanding the terms and conditions of a Trust Deed is an extremely important factor to consider before you enter into one.

We are always on hand to offer advice; it’s free and confidential so please do not hesitate to contact us on 0141 221 2323.

All of our advice is free, and we do not charge you if your Trust Deed proposal is rejected by creditors.

Whilst there are fees involved in a Trust Deed, these are deducted from your monthly payments or, if appropriate, the sale of an asset. There are no up-front fees.

Trust Deeds are only available to Scottish residents and you must have lived in Scotland for at least six months before you apply. If you are based in England or Wales, then debt solutions such as an IVA may be a suitable alternative.

As with all debt solutions, Trust Deeds are specific to an individual’s circumstances. Generally, you need over £5,000 for this debt solution.

However, there are numerous factors considered when choosing the right solution for you, try our Debt Assistant or contact us for more information.

Trust Deeds are suitable if you have a considerable level of unsecured debts. These are debts that are not secured against an asset, such as a credit/store card, bank/payday loan or overdraft.

Debts such as mortgages, secured loans or hire purchase cannot be included in a Trust Deed as they are secured against an asset.

If you fail to keep up with payments, we will write to employers in a bit to recoup payments. You should check with your contract to ensure you are not breaching any terms of your employment.

When you enter into a Trust Deed this will also appear on the Register of Insolvencies in Scotland which is a public record.

 

If you are a homeowner, the level of equity (the difference between the value of your home and how much you owe to your mortgage provider) is determined in the beginning. If you have high equity, then this must be released to your Trustee to be paid to your creditors.

An advisor will discuss the different ways to release equity with you, ensuring you have all the correct information before you even put your name on the dotted line. Each case is different, but it is highly unlikely that the Trustee will force you to sell your home.

Once all the relevant information has been collected and all factors have been considered, a Trust Deed can be set up immediately.

In this instance, your Trustee would resign, and you would be given further advice. There are other debt solutions available that we may be able to help you with.

No. All Trust Deeds must be arranged and administered by an Insolvency Practitioner.

If you are unhappy with the way your Trustee has dealt with your Trust Deed, it is important that you talk to them.

Your Trustee decides if you have met your obligations and whether you will be discharged from your debts. As such, making them aware of your concerns can help to resolve them as quickly as possible.

All Trustees are members of an approved governing body. If they are unable to resolve your concerns, they will refer you to this body to help.

We've helped so many others just like you.