Published on June 4th, 2015 | by FinanceLoophole1
Protected Trust Deed Scotland – Write Off Debt
What Is A Trust Deed?
A Protected Trust Deed lets you write off your unaffordable debt over 4 years if you live in Scotland.
A Trust Deed is a voluntary but formal arrangement available in Scotland which is entered into between a person in debt and the people they owe the money to (their creditors). A Trust Deed debt solution is designed to help people living in Scotland, who are struggling to pay their debts, because they have over extended their credit limits, and can no longer pay their monthly payments.
The Trust Deed arrangement lays out what bit of your debt will be paid back to your creditors. The debt repayments are designed to be at a level that is affordable. The Trust deed lasts for a period of 4 years, although a longer period can be considered.
The Trust Deed offers protection to you (the debtor) from the legal enforcement of all debts which are included in the trust deed, but only once the debt had become protected.
Once the Trust Deed is Protected it is an extremely powerful legal tool that can be used to help people in debt swiftly back on the road to financial stability.
The minimum repayment period for a Trust Deed is 48 months* (4 years) unless an alternative arrangement is agreed. You will be required to pay a set amount per month for the 48 month (or longer) period. At the end of term, provided that you have met your obligations and the Trust Deed is not extended, you will be discharged from any obligations and outstanding unsecured debts included in your trust deed.
Do I Qualify For A Trust Deed?
Finding out if you qualify for a Scottish Trust Deed is simple. More importantly you need to ensure that a Trust Deed is the right debt solution for you as it is a serious step for anyone to take.
If you are struggling to pay your debt and live in Scotland then a trust deed could be the debt solution you need.
The basic qualification criteria are;
- You are having difficulty repaying your debts.
- You are currently living in Scotland and you have been there for or at least six months
- You owe at least £5,000
- You owe money to 2 or more creditors
- You are able to make minimum monthly payment of no less than £80
A Scottish Trust Deed applies to unsecured debts such as loans, credit cards and overdraft but doesn’t include student loans.
If you are having problems with your personal debt we can help you with a Trust Deed – just fill in this form with your details and see if you qualify.
Don’t qualify For A Trust Deed? There Are Other Options
Not everyone will qualify for a Protected Trust Deed. That does not necessarily mean you need to continue to struggle making your repayments. There are other alternatives you could be eligible for including a Debt Arrangement Scheme (DAS) or Sequestration.
How Does A Trust Deed Work
- Consult an Insolvency Practitioner who acts on your behalf as your Trustee. You will sit down with your appointed trustee and discuss your personal financial circumstances. This will enable them to help you to draw up a realistic budget and determine what level of monthly repayments will be affordable to go towards paying off your debt.Your single monthly payment will replace any other repayments to your existing creditors. This repayment plan forms the basic framework of the Trust Deed which will be submitted for approval to your creditors.
- Once your Trust Deed has been signed, your appointed Trustee will then send the proposed payment plan to all of your creditors. The payment plan will clearly detail how much you propose to pay them, how any of your assets, if you have any,will be dealt with and how much your creditors can realistically expect to receive for the duration of the Trust Deed.Creditors then have five weeks from the publication of a Notice in the Register of Insolvencies to accept or reject these proposal. In the case of no objections, or no objections from the majority (in number) of your creditors or are less than 1/3 in value of the total debt amount are received, the Trust Deed will then achieve Protected status. If however sufficient objections are received to your proposals then the Trust Deed will have failed. If this were to happen your Trustee would be required to resign and you would be given further advice.If your creditors do not respond to your proposed repayment schedule it is considered that they have agreed to what you have proposed and your Trust Deed will have achieved Protected status.
- Once your Trust Deed has acquired protected your creditors will be unable to take action against you to recover any of your debts.For a homeowner, the level of your home equity (difference between the value of your home and the amount you owe to the secured lender) will be determined at the start of the Trust Deed process. If you have a substantial amount of equity in your home, you must release this to your Trustee to pay your debt to your creditors. Your trust deed debt advisor will discuss with you the different ways which you can release equity before you sign off your Trust Deed. It is highly unusual that you will be forced into selling your home by your Trustee, though every situation is different.
- Once all of the scheduled debt repayments have been completed (normally over a period of 4 years) and all of the Trust Deed terms have been met, you will be issued with a discharge letter. The Trust Deed discharge letter confirming that your responsibilities under the agreement have been fully discharged. From this point, all of your creditors included in the Trust Deed will be unable to pursue you for any more money that may be outstanding from the original debt.
Advantages Of A Trust Deed
- Payments are based on what you are reasonably able to pay.
- Pressure of unwanted phone-calls and letters is removed.
- Administration is undertaken by the Insolvency Practitioner.
- Once your Trust Deed acquired “Protected” status – you creditors won’t be able to take any legal action to recover your debts and will be bound by the terms of the Trust Deed they have agreed to.
- You will be able to regain control of your finances
- All of the costs for the Trust Deed agreement will be paid from the monthly contributions which you make to the bank account held in trust for your creditors. All of the Trustees fees and expenses are agreed between him and your creditors and will be deducted from the nominated bank account, and where appropriate, from the sale of any of your assets.
- Upon completion of the Trust Deed (normally a period of 4 years) the outstanding balance of any debts included in your Trust Deed will be written off.
Disadvantages Of A Trust Deed
- Any enforcement action in progress prior to the Trust Deed will continue.
- If you own your own home and it has equity, this must be released to pay your creditors. There are a number of ways to do this without resorting to selling your home. For example you could re-mortgage or have a third party eg. family or friends making payments for you.
- Creditors could vote against your Trust Deed becoming Protected.
- Certain professional bodies will prevent their members from signing a Trust Deed.
- It could affect your credit rating so you may find it difficult to obtain credit in the future. Credit reference agencies assess your risk level based on your financial history which may well include the Trust Deed.
How To Clear Your Debt
If you are having problems with your personal debt in Scotland we can help you with a Protected Trust Deed – just fill in this form with your details and see if you qualify.
To find out more about managing your money and getting free advice, visit Money Advice Service, an independent service set up to help people manage their money.