Trust Deed Scotland - Everything You Need to Know, FAQs, Tips & More

Trust deeds in Scotland are more common than you think. Any debt adviser would inform you about the benefits of getting a trust deed arrangement. 

If you are amongst those people who are struggling with debt, this could be the perfect solution for you.

In this article, I have outlined all the important things you need to know on how to pay off your debts easily.

Table of Contents

What does a trust deed refer to in Scotland?

A trust deed is a legally binding agreement that provides debt solutions. This is made between the owner and the creditors through a mutual agreement.

This is when you consent to pay back a portion of your owning to protect your assets. This could include your home and your car. 

Regular payments are made and after a fixed time your debts could be written off.

How long does a trust deed stay on your credit file?

On average, a trust deed in Scotland could stay in your credit file for six years. However, the processing is generally completed within a period of four years.

This could also depend on an individual person as well.

What is a protected trust deed?

Protected trust deeds could provide debt solutions through a licensed insolvency practitioner or a trustee.

This is a voluntary process that can help people find a debt solution. However, obtaining a protected trust deed is an independent service set that is different from bankruptcy.

Since it is a form of insolvency, your unsecured debts need to exceed the amount for your personal assets. 

Your trust deeds become protected after a mutual agreement between you and your creditors.

Trust Deed Amendment - Is it possible?

Yes, you could be able to make amendments.

In case your financial situation has improved, you might be expected to contribute a greater sum or pay off your debts earlier. 

However, if your situation has worsened, your monthly payment for unsecured debts might decrease.

Moreover, you could be allowed to take a short break from making your payments until your situation improves. This could impact your credit rating. 

It is important you contact your trustee in both cases for debt advice.

Trust deed Criteria - Am I eligible?

The main criteria includes: 

  • You either currently live in Scotland or have resided within the last 12 months. 
  • Your workplace is located in Scotland.
  • Your debt value is £5,000 or more.
  • You are able to make a monthly contribution from your income
  • You are unable to pay off your debts
  • Your liabilities overweigh the sum of your assets.

If you fall under the criteria mentioned above you could qualify for a trust deed.

Trust deed online - How to register?

You could find a trust deed registration form online for your debts.

It is important you go through the documents before approaching credit reference agencies for your debt management.

  1. Visit an online register
  2. Select the appropriate link
  3. Fill in your personal information
  4. Click the search button

In case of a protected trust deed, you may want to seek legal advice.

Is a trust deed a good idea?

A trust deed may help you reach financial stability. It has allowed individuals to pay off their unaffordable debts with the help of creditors. 

However, there are some limitations. If you do not have a stable monthly income it may not be the best option.  You might find an alternative debt solution that is just as effective.

Can you sell your house whilst in a trust deed?

You could be able to sell your house with your trustees’ approval. However, you might need to get your solicitor to contact your trustee first.

If your house is owned by a family trust, you need to ensure that the independent trustee agrees before you make a payment term.

What is a trust deed guarantor?

This is a type of loan that you could avail in case your credit rating is imperfect. You could be able to get a greater amount of loan. 

However, the interest and charges are high. This makes it risky for the lender.

In order to provide more security to the lender, a guarantor is involved. 

In case you are unable to make the payments, the guarantor becomes legally responsible. This could be someone from your family or a personal friend.

How much debt do I need to enter into a trust deed?

Your debts should exceed £5,000. 

However, you could apply if your debts are less than £5,000. 

I would advise you contact your trustee for more information.

Trust deed disadvantages - Everything you need to know

There are a number of disadvantages you could face.

I will list some down for you.

  • In case you are a homeowner, a monthly payment has to be paid from your income to your creditor.
  • Your creditors could prevent your trust deed from becoming protected.
  • Future credit requests could become difficult.
  • Legal bodies could prevent members from signing your documents.
  • Your terms of employment could be affected.
  • There is a significant risk of bankruptcy. 
  • The time of your pay back could affect your credit rating in the future.
  • Your credit ratings could be affected for 6 years.

Trust Deed Calculator - Complete Process

I will list a simple step by step process. 

  1. The first step is identifying how much debt you have. 
  2. Then identify how much money you have for monthly payments.
  3. Identify your current employment status.
  4. Identify your disposable income
  5. Your worth of assets

If you are able to conveniently pay a trustee, you should consider applying. However, I would advise you to contact a legal advisor before proceeding.

What is a security trust deed?

This is a legal document that is evidence of the agreement made between the debtor and the creditor. 

Trust Deed and Rules - Everything You Need To Know

There are a number of rules you are expected to follow. 

These include: 

  • You should only apply if you have lived in Scotland for a minimum of 6 months.
  • Your unsecured debt amount should exceed £5,000. These include debit and credit card.
  • It is essential you contact your trustees before making any amendments. 
  • You can not sell your assets without your trustees consent.
  • You will have to provide documentation of all your liabilities. 
  • Your trustee can reject your claim to make your offer protected. 
  • Your payment terms are mutually decided between you and your trustee.
  • Your credit rating may differ based on your council tax.
  • Trust deed payments need to be paid within the designated time.

Failed trust deed - Complete guide on what you should do

In case of a failed trust deed, your creditors terminate your contract. 

This means: 

  • You are no longer under the protection of your creditors. However, they could contact you again.
  • Your trustees may ask you to contact an accountant in bankruptcy.
  • Your interests and fees will become unfrozen.
  • You might not be able to get creditors to make another agreement with you.

However, you should be able to apply for other Scottish trust agencies for debt solutions. 

Debt management plan could be an alternative for you. 

I would advise you contact legal experts in this case.

All-Inclusive Trust Deed - Complete overview

An all- inclusive trust deeds could also include the balance due and the new funds advanced. 

Moreover, it combines numerous loans under a single security.

Furthermore, it prevents the buyer from applying for a mortgage. This means the seller is able to sell his or her house to potential buyers.

Is a trust deed an Iva?

Scottish trust deeds are only available for Scottish residents. 

However, Individual Voluntary Arrangement (IVA) is an English, Northern Irish, and Welsh management process. This is only eligible for people residing in these areas.

Trust deed companies - A complete guide

The first thing you should do is select the state, where you want to make the registration. 

Moreover, a jurisdiction must be selected. This will help understand the governing law of the deed. 

You might also want to visit a number of companies before choosing a Scottish trust deed company

It is essential you ask your trustees about their debt payment program before making an agreement. 

There are a number of things you might want to keep in mind:

  • The place of administration of your selected Scottish debt agency. 
  • The location of your assets.
  • Office of your trustees.
  • The debt levels

Try making phone calls to companies before approaching them.

Trust deed or debt arrangement scheme - Complete overview

Trust deeds are voluntary legal agreements between you and your creditors. This is mainly set up by private companies in Scotland. 

However, debt arrangement schemes are set up by the Scottish government. This way people manage their money and pay off their debts. Moreover, there is no threat from the creditors in case you have council tax arrears.

Frequently Asked Questions (FAQs)

What is the difference between a trust deed and bankruptcy?

Trust deed allows you to make monthly installments to pay off your debt.

However, bankruptcy is when you are legally declared as insolvent. Moreover, your record is updated in the register of insolvencies. In this case, you could appeal to court if you are unable to pay off your debt.  

What happens if I stop paying my trust deed?

Your creditor could terminate your trust deed. 

Moreover, you could lose money. 

Furthermore, you might not be able to get an agreement later in the future.

Could I lose my house with a trust deed?

If you make your mortgage payments timely, you will not lose your house. 

What will happen after my trust deed ends?

You will be given a letter of discharge. Moreover, your unsecured debt will be written off.

How long does a trust deed last?

It could last for approximately four years. For more information on this, you can click here

Will a trust deed affect my partner?

No, it will not affect your partner unless a joint debt agreement has been signed.

To conclude

There is no doubt that trust deeds can help people manage their financial issues. 

However, it is essential that you are aware of all benefits and risks associated with getting into this arrangement. 

Follow the instructions carefully. It includes everything you need to know before reaching out to a trustee. 

For any further information, feel free to contact us.

×