Can I have more than one Trust Deed?
For some people in serious trouble with their debts, going insolvent can be the best way of dealing with the problem.
In Scotland, for example, a Trust Deed is an insolvency solution designed to let people repay what they can towards their unsecured debt - if they can't pay it all back in a reasonable timeframe.
However, insolvency is by no means an easy step to take - and it will have a big effect on your credit rating and overall finances.
People who've dealt with serious debt problems in the past may feel like they never want to borrow money again, but life doesn't always turned out as planned. If you found yourself facing serious debt problems further down the line, could you actually get another Trust Deed?
What is a Trust Deed?
A Trust Deed is legally binding and a form of insolvency. It's exclusively available to people in Scotland who have at least £5,000 worth of individual unsecured debt or £10,000 worth of joint debt - e.g. on credit cards, overdrafts and personal loans - that they can't repay in a reasonable amount of time.
How does a Trust Deed work?
The basic idea of a Protected Trust Deed is that you'll agree to repay what you can afford over an agreed period of time (typically 4 years) - and as long as you stick to all the agreed terms, any remaining included debt will be written off once your Trust Deed comes to a successful end.
Entering a Protected Trust Deed means:
• You'll make one payment per month, based on what you can afford around your essential costs (e.g. rent/mortgage, bills, Council Tax)
• You'll stop your unsecured lenders from taking any further action to recover their money
• You'll be able to stay in your home if you're a homeowner (but you may have to release some equity - and you'll have to keep up with the mortgage payments yourself)
• Your lenders will agree to write off any included debt you can't repay once your Trust Deed ends successfully.
Note that a Trust Deed will damage your credit rating for six years.
Can you have more than one Trust Deed?
You'd only be able to enter into a Trust Deed if you're having serious problems with your debts and can't repay everything you owe in a realistic timeframe.
If you've completed a Trust Deed and you end up in real trouble with your debts further down the line, entering another Trust Deed may be your only option - and your lenders may consider it the best way of getting back a reasonable amount of what they're owed.
As long as you've been discharged from your previous Trust Deed, there's no legal restriction or time limit on entering a second one - and your lenders will vote on whether or not to accept another Trust Deed in the usual way.
Just bear in mind that they may be less likely to agree to this since you've only recently completed a Trust Deed.
Is a Trust Deed right for me?
If you're struggling with your debts, it's important to get some debt advice in Scotland. You could fill in the debt solution finder and one of our advisers will discuss your options with you.
Article Updated 12/12/2013