Trust deeds arrangements are mutually decided between you and your creditors.
Your trustee carries out all your financial tasks so you do not have to worry about directly contacting the people you owe money to.
However, the agreements are made only if you are eligible and fall under the criteria of a Scottish trust deed.
Read this guideline carefully to understand whether you are entitled to a trust deed in Scotland.
What is the criteria for a trust deed that is protected?
A protected trust deed is available for Scottish residents including:
- Home owners
- In case you live with your family
Moreover, you must be insolvent in order to apply for protected trust deeds.
Furthermore, the amount of your debt should be less than £5,000. This amount should be owed by at least 2 or more creditors.
How do I know I am eligible for a trust deed?
You could be eligible for a trust deed if you are a Scottish resident or you have lived in Scotland for at least 6 months.
Moreover, if your unsecured debt is at least £5,000, it could be easier for you to get a trust deed.
It is important that you are able to make monthly payments. The payment is decided after deducting your monthly expenditure and disposable income.
Furthermore, you are expected to be insolvent. In this case, your debt amount should be greater than your total sum of assets. This means you should not be able to pay back your debts.
Your income should not solely be through benefits. You are expected to have a monthly wage and the non – benefit income should exceed the total payment amount.
Lasty, you can not have been bankrupt in the last 5 years.
What should I do if I do not fall under the criteria of a trust deed?
In case you do not fit in the criteria of a trust deed, you could apply for other debt solutions.
Individual Voluntary Arrangement (IVA): voluntary agreement with your creditor to pay off all your debts through monthly payment.
Debt Arrangement Scheme (DAS): A scheme set up by the Scottish government to pay off debts. In this case your interest and charges are frozen. However, this could affect your credit rating.
Sequestration: You will be expected to make payments over a period of time only if you can afford them.
Debt Consolidation Loan: withdrawing new credit to pay off your current credit.
I would suggest you contact your trustee for debt advice. They will evaluate your financial situation and suggest the best way to pay off your unsecured debts.
How does a trust deed work?
After you have signed legal agreement papers with your creditors, you are expected to make monthly payments for approximately 4 years.
Contact an insolvency practitioners association to find a professional who can help you with your insolvency process.
Your trustee will then contact and deal with your creditors. This means you do not have to worry about your debts.
After your trust deed is complete, the remaining debts will be written off.
What is the criteria for getting a trust deed twice?
Applying for a trust deed for the second time could be easier since you will have a better understanding of how it works.
If you have successfully completed your previous trust deed without any disturbances, you could get a trust deed arrangement another time.
Your creditor will vote on the trust deed the same way they did previously. If they agree, you could begin your arrangement with your trustee again.
However, it is important to make sure that your credit rating has not worsened.
Can I get a trust deed if my previous one failed?
Getting a trust deed if your previous one failed, could be difficult.
It is important to understand that you must be discharged from your previous trust deed before you enter a second one.
You will be evaluated on the basis of your history of repayment and amount of debts that was written off.
In case you have a bad score, your trustee might ask you to opt for a different debt solution.
This could include:
Frequently Asked Questions (FAQs)
How long will my trust deed last?
Your trust deed could last for approximately 4 years in Scotland.
How do I keep updated about my progress?
After you have handed over your debt arrangements to your trustee, you will not have to worry about the payments.
However, you could contact your trustee to keep an update about your progress.
Will my trust deed control my bank account?
Normally you will be advised to open an account in another bank. This is mainly because you could have unsecured debt in your previous one.
Who will look after my trust deed account?
After contacting a licensed insolvency practitioner, you will sign an agreement with them.
Most insolvency practitioners work as accountants. They take care of your accounts.
However, your trustees could also take up this responsibility.
A trust deed criteria might seem extensive, however, it is not a difficult one to fulfill.
Read the instructions and guidelines provided carefully in order to be well informed before applying for a debt solution.
All the necessary information has been mentioned in the article above.
For further information please feel free to contact us.