Are you a resident of Scotland struggling to repay your debts?
If so, you may be eligible for a Scottish Trust Deed – a formal arrangement that helps you to make affordable debt repayments, over a fixed period. At the end of this period, a significant amount of your debt could be written off.
Interested in finding out more about managing your debt?
In this post, we answer all of the common questions relating to Scottish Trust Deeds and breakdown the criteria to qualify. We’ll also show you how to start the Trust Deed process immediately and completely free of charge…
- What is a Scottish Trust Deed?
- Trust Deed Scotland – Key Features
- Trust Deed Scotland Pros
- Become Debt Free
- A Single Monthly Payment
- Free & Easy Setup
- No Interest or Charges
- Generous Allowances
- Protection From Creditors: No Calls, Texts or Letters
- Protected Pension Funds
- A Fresh Start
- Trust Deed Scotland Cons
- Your Credit Rating Will Be Impacted
- Doesn’t Cover Secured Debts
- Debts That Can Be Included in a Protected Trust Deed
- Debts That Can’t Go into a Protected Trust Deed
- Do I Qualify for a Scottish Trust Deed?
- What Does a Trust Deed (Scotland) Cost?
- Will a Scottish Trust Deed Impact My Credit Rating?
- So What’s a Scottish IVA? Is There an IVA Scotland?
- Are My House and Car At Risk?
- Get Started with a Protected Trust Deed
What is a Scottish Trust Deed?
A Scottish Trust Deed is a voluntary arrangement made with the people that you owe money to – better known as your creditors.
When you enter a Trust Deed, you agree to pay a low, monthly payment for a period of 4 years. After this period is finished, your remaining debt is completely written off and you become debt-free.
It’s a popular, legally binding debt solution that’s government-backed and must be set up by a qualified professional, known as an Insolvency Practitioner.
Trust Deed Scotland – Key Features
- Scottish Trust Deeds typically last for 4 years (48 months)
- a Trust Deed freezes your debts and allows you to pay them back over a set period
- debt collectors and bailiffs will not be allowed to contact you, and all interest/charges will stop
- after the 48 months, any money still owed will be written off
- you can apply for a Protected Trust Deed if you can afford to make regular payments towards your debts (even if this is not the full amount your creditors want)
- these monthly payments can start from £80 per month
- the Scottish Trust Deed is set up by an ‘Insolvency Practitioner’, who works with you to create a proposal
- to have the proposal approved, creditors representing a minimum of 50% (in value) must vote to agree to it
Trust Deed Scotland Pros
Entering a Protected Trust Deed is recognized as an effective way to clear your debts and is becoming more popular, year on year. This is no surprise when you take a second to consider all the benefits…
Become Debt Free
The fixed period for a Scottish Trust Deed is 4 years (48 months). Once this period is complete, your remaining debt will be written off and you’ll become completely debt-free. The % of your debt that is written off will depend on the monthly payments you agreed to initially, but it’s likely to be a significant amount.
A Single Monthly Payment
You only need to make one affordable monthly payment, paid to your assigned Insolvency Practitioner (IP). The exact amount of these monthly repayments will be based on your individual circumstances but can start from as low as £80 per month.
Free & Easy Setup
You can get started by speaking with a qualified debt advisor, free of charge. Plus, with a Trust Deed, there are zero upfront costs – your only commitment is the low monthly payment.
No Interest or Charges
Once you have entered your Trust Deed, all interest and charges on your unsecured debts will stop. High interest rates and charges are common occurrences for many in debt, but that can become a thing of the past.
When you’re in debt you often have to make sacrifices, and sometimes even have to cut back on things that would normally be considered essential.
With a Protected Trust Deed, your Insolvency Practitioner will run through a detailed budget with you. As long as you’re open and honest, this budget will cover all of your essential spendings, so you won’t have to go without.
Here are some examples of items which would appear in the budget:
- rent or mortgage payments
- utility bills
- mobile phones
- children’s pocket money
- fuel costs
- other living costs
Protection From Creditors: No Calls, Texts or Letters
When your Trust Deed is approved by your creditors, they will not be allowed to contact you, at all. This is a legal requirement and means that all letters, phone calls, and visits, stop immediately. All future creditor contact would go directly to your Insolvency Practitioner, to handle on your behalf.
Protected Pension Funds
Your private pension will be protected in a Trust Deed. Your Trustee can’t force you to withdraw this, and once debt-free, you’re able to continue building it.
A Fresh Start
When your arrangement starts, you’ll receive a date of completion. As long as you maintain your payments, this is the date you’ll become completely free from unsecured debt. You can imagine the great sense of relief that comes with a clean slate, and this moment marks a fresh start for you and your family.
Trust Deed Scotland Cons
Although Protected Trust Deeds have many advantages, of course, it can’t all be positive. While these downsides aren’t a deal-breaker for most people, it’s smart for you to understand exactly what a Trust Deed entails…
Your Credit Rating Will Be Impacted
Yes, unfortunately, your credit rating will be impacted. But as soon as the terms of the trust are completed, you are free to rebuild your credit file and take on further credit, if you wish.
Doesn’t Cover Secured Debts
A Trust Deed only covers your unsecured debts. Don’t worry if you don’t know if this includes the debts you currently have – we break it down next.
Debts That Can Be Included in a Protected Trust Deed
It’s primarily your unsecured debts that can be placed into a Trust Deed. Unsecured debt is a debt that is not backed up by a guarantor, or protected by an asset.
Here are the most common forms of unsecured debt…
- credit cards
- unsecured loans
- payday loans
- store cards
- council tax debts
- benefit overpayments
- credit union debt
- HMRC debt
- old car finance debts
- debts to friends and family
Debts That Can’t Go into a Protected Trust Deed
Not everything can go into a Scottish Trust Deed. Unfortunately, you won’t be able to get the following debts protected:
- mortgage payments
- rent arrears
- log-book loans
- hire purchase arrears
- guarantor loans
- personal guarantees
Do I Qualify for a Scottish Trust Deed?
Qualifying for a Scottish Trust Deed requires that you meet a set of criteria.
These criteria aren’t set in stone though, and if you narrowly miss out it’s still possible to enter a Trust Deed. Ultimately, this is at the discretion of your Insolvency Practitioner.
The criteria are as follows:
- A minimum debt level of £5000 (unsecured)
- You must owe money to two or more people (or have 2 lines of credit with one lender)
- You must be a Scottish resident
- You must be willing to put at least £80 per month into your arrangement
To check if you’re eligible right now, you can use our calculator tool. It’s free to use and only takes a couple of minutes to get through the questions.
Alternatively, keep reading for our answers to the most frequently asked questions we get about Trust Deeds…
What Does a Trust Deed (Scotland) Cost?
There are ZERO upfront fees when you apply for a Trust Deed. In fact, the only payment that you’ll ever make is your fixed monthly contribution.
Will a Scottish Trust Deed Impact My Credit Rating?
Yes, as mentioned in our ‘cons’ section, unfortunately, a Trust Deed will harm your credit rating. When you’re in an arrangement, you’ll be unable to take out further credit i.e. 60 months from your start date.
But for most people, this isn’t a problem.
The monthly payment rate is based on your affordability and so it’s unlikely you’ll actually need to take out extra credit during this time.
In any case, when the Trust Deed has finished, you can begin to rebuild your credit rating. That means a completely fresh start, with no debt whatsoever. And from this position, there’s plenty you can do to gradually improve your credit score.
So What’s a Scottish IVA? Is There an IVA Scotland?
At this point, you may be wondering what the difference is between a Scottish Trust Deed and a Scottish IVA. Actually, there is no such thing as a Scottish IVA. But a Protected Trust Deed (aka Scottish Trust Deed) is a similar solution for those living in Scotland.
An IVA and a Protected Trust Deed operate similarly and are both government-backed, legislated debt solutions. There are some important differences between the two, though. But talking to a qualified advisor can clarify any questions you may have about this.
Are My House and Car At Risk?
Most people take out a Scottish Trust Deed to protect their family home, and for the vast majority of people, their home will be protected.
But if you have a lot of equity in your property, your Trustee may ask you to remortgage it, to release some of this money. If there is little or no equity, then this would be unlikely.
There’s also a good chance that you’ll be able to keep your car too, especially if you use this to travel to work or for journeys that are considered essential.
Get Started with a Protected Trust Deed
We always advise our readers and customers to tackle their debts head-on and to take action as soon as they’re able. When it comes to managing your money and clearing debt, an act-fast approach will (quite literally) pay-off in the long-term.
We can give you tailored advice for your specific circumstances and we’re here to guide you through the entire process of setting up a Trust Deed arrangement. This debt advice is FREE and you can get started immediately by calling us on 0800 233 5753.