Trust Deed

A Trust Deed is a debt solution open to residents in Scotland, it uses Government legislation to form an agreement between the personal struggling with debt and a Trustee. This voluntary arrangement is not the same as a debt consolidation loan. It allows you to pay off your debts with the additional income you have each month, usually over a period of three or five years.  The Trustee is responsible for presenting your proposal to the people that you owe money to, your creditors.

The Trust Deed will be protected as long as less than half of your creditors (in number) and a third (in value) object. Once the Trust Deed has been arranged the creditors are unable take any further action against you, and no further interest or charges will be added. Once the Trust Deed has completed your outstanding debt will be wiped out and you will be able to live your life completely free from the debt.

As the Trust Deed is a voluntary agreement it does not involve the courts but once it is signed by you and the creditors you are committed to the terms as it is still a legal contract.

Trust Deed Eligibility Criteria

Entering a Trust Deed is not particularly complicated and there are just a few basic criteria including the following:

•  You must be a resident in Scotland
•  Your total debt must be more than £10,000
•  Your debts must be unsecured (rather than secured against assets, such as your home)

Trust Deed Advantages

If you have high outstanding debts, other debt solutions such as debt management plans and debt payment programmes may not be suitable for you. A Trust Deed is a great option for people who also want to avoid the pains of going through bankruptcy.

There are many benefits to entering into a Trust Deed, including:

• Frozen interest and charges
• No more calls and letters from creditors
• Flexible alternative to bankruptcy
• Some companies are still able to trade
• Details are not published in newspapers
• Debt free after period of Trust Deed
• No minimum debt amount or monthly payment

Other things to consider

Whilst a Scottish Trust Deed has numerous advantages and benefits for those struggling with debt, it is not the right path for everyone. It is important that you consider your personal circumstances before committing to any type of debt solution, speaking to an independent adviser could help you make the right decision.

Upon entering a Trust Deed you will have to declare all of your assets and liabilities. In some cases you may even have to release any equity in your property and sell items with a high value to raise funds to pay off the debt. Throughout the three or five year period of your Trust Deed your income and outgoings will be monitored. Entering the agreement will also have a negative impact on your credit rating, potentially affecting your ability to obtain affordable credit in the future.