What is a Trust Deed?

A Trust Deed is a legally binding agreement between you and your creditors to repay what you can afford towards your debts. It is a form of government legislation to assist those who have serious debt problems and are struggling to meet their unsecured repayments each month. You pay one single set payment per month for a period of 36 months and then after that all any remaining debt is legally written off and you walk away debt free.

How can it help me?

A Trust Deed can assist you in lots of different ways. Instead of paying multiple debts to numerous creditors a Trust Deed will consolidate all your debts into one single, lower affordable monthly repayment without the need for taking out a consolidation loan.  All your interest and charges are frozen for the set period so your debts will no accumulate, whereas if you are currently paying the minimum payments each month, the majority of the deposits you make will be going in the banks pocket.

Once you have made your set amount of payments for the 36 month period any remaining debt is written off. This can be up to 90% your total debt meaning if you owe £55,000 you could potentially have £49,500 completely wiped out.

Your assets, such as your car and your home can become protected which will prevent them from being repossessed by your lenders, unlike sequestration where you would be expected to offer these to cover the debt you have not repaid.

Another bonus of a Trust Deed is that once you are in the programme your creditors are not legally allowed to contact you, meaning all those annoying phone calls and threatening letters will stop. Which unlike Scottish Debt Management which is not legally binding, your creditors are not obliged to freeze interest and charges and can contact you even after a repayment plan has been set.

What is the process to setup a Trust Deed?

The administration for setting up a Trust Deed is a lot simpler than sequestration. Although it is a legally binding agreement a court appearance is not necessary, all correspondence and dealings will be handled for you by our licensed Insolvency Practioner. They are referred to as your ‘Trustee’ and will deal with your creditors on your behalf. Your ‘Trustee’ will assess your situation and establish a repayment plan you are comfortable with. They will then draft together the Trust Deed which usually takes approximately 6 weeks and present it to your creditors. Once they have accepted the Trust Deed will be passed and you will begin making your set monthly repayments, all phone calls and letters will stop and in 36 months time your will debt free.

Click here for more Trust Deed Pros and Cons

What are the downsides?

Your credit rating will be affected whilst on the programme and you are not allowed to obtain further credit. The Trust Deed will be marked on your credit file and will remain there for up to 6 years which can prevent you from obtaining further credit from certain lenders. Your income and expenditure will be regularly reviewed so if you get a pay rise in work you may be expected to increase your monthly repayments. You may also be required to release equity on your property but this is based on your circumstances as Trust Deeds are tailored individually to each person.

Do I qualify for a Trust Deed?

The criteria for a Trust Deed is straight forward and we will be happy to discuss your situation with you. The basic criteria is as follows;

• You must owe at least £10,000 to 2 or more creditors
• Only residents of Scotland can apply for a Trust Deed (You must be resident there for at least 6 months)
• You must be able to afford at least £150 towards your debts each month
• Be in Full or Part time employment

What is the process to setup a Trust Deed?

Contact us on 0800 043 2027 for more information or to see if you qualify.