Can utility bills be included in a Trust Deed?
Utility bills are secured / priority debts: if you stop paying them, your providers may cut your supply off. Trust Deeds don't include secured debts - they're designed to help people in Scotland who are really struggling with their unsecured debts.
There is an exception, however. If you have utility bill arrears to a previous provider, these can be treated in much the same way as unsecured debts (your previous provider won't be able to cut off your service if you don't repay them). So they could be included in your Trust Deed.
How can a Trust Deed help with secured debts - like monthly utility bills?
When you start a Trust Deed, you and a qualified Insolvency Practitioner will work out how much you have to put towards your unsecured debts every month.
You'll do this by taking all your essential costs into account - which will include your utility bills - and figuring out how much you have left afterwards.
If your Trust Deed goes ahead, this means that you'll make an affordable payment towards your unsecured debts every month. These payments shouldn't interfere with your priority costs like your mortgage/rent, food and utility bills (both your on-going bills and your monthly payments towards any arrears you owe to your current utility provider).
If you keep up with your payments as agreed, your Trust Deed should finish after four years. Any unsecured debt (that was included in your Trust Deed) that you haven't managed to repay will then be written off.
Once you're clear of your unsecured debts, you should find it much easier to stay on top of your finances in general, from mortgage payments to utility bills.
What are the disadvantages?
A Trust Deed is a legally binding debt solution, which means that - though it can help you if you are really struggling - it does have consequences. It will damage your credit rating for six years, for example. And although, if you're a homeowner, you won't be asked to sell your home (as you might be if you entered bankruptcy), it's likely that you'll be asked to release some equity. . If you can’t release any equity then your Trust Deed could be extended by 12 months.
If you're not sure whether a Trust Deed is right for you, fill out this debt solution finder and a friendly adviser will call you back with some Scottish debt advice.
Article Updated 12/12/2013