What debts can be included in a Trust Deed?
If you're a Scottish resident, there are some ways of dealing with problem debts that are only available in this part of the UK.
A Trust Deed is one example of a 'Scotland-only' debt solution - and if you have at least £5,000 worth of unsecured debt (£10,000 if it’s joint debt) that you don't think you can pay back in a realistic amount of time, it could be the right approach for you.
We'll look here at what a Trust Deed involves - including what types of debts can be included in one.
What is a Trust Deed?
A Trust Deed is a form of insolvency solution, which works in much the same way as an IVA (Individual Voluntary Arrangement) - a kind of insolvency that's only available in England, Wales and Northern Ireland.
A Trust Deed is designed to help borrowers struggling with significant unsecured debts that they can't repay in a timeframe that's seen as reasonable.
How does a Trust Deed work?
The basic idea of a Trust Deed is that it allows you to repay what you can safely afford towards your unsecured debts over an agreed time period - usually four years.
Once a Trust Deed has been agreed, you'll begin making lower monthly payments that still leave enough room in your budget for all your basic outgoings, e.g. rent/mortgage, utilities and food.
While your Trust Deed is in progress, your lenders will not take any further action against you - as long as you keep up with your payments. On successful completion, your lenders will write off any debt included in your Trust Deed that you haven't been able to repay.
What debts could I include in a Trust Deed?
A Trust Deed is designed to help people with their unsecured debts. Unsecured debts include things such as personal loans, overdrafts, credit/store cards and catalogues - basically, any money that you've borrowed that you haven't secured against any of your assets.
Also, remember that a Trust Deed will only be an option if you can't afford to repay those debts.
If you're looking for more information about Trust Deeds, this page could help.
Are there any disadvantages to a Trust Deed?
If you enter a Trust Deed, it'll appear on your credit record - where it'll stay for six years. As a result, it's likely you'll struggle to get further credit during the two years after your Trust Deed finishes (if it lasts for four years, as Trust Deeds normally do).
What's more, if you have your own home, you may have to release some of the equity - but you should be confident that you can stay in it.
Is a Trust Deed right for me?
You should get some professional debt advice in Scotland before making any firm decisions about how to deal with your debts.
We could help you. Our debt advisers are just a phone call away if you'd like to discuss your financial situation and find the most suitable solution to your debt problems.
Article Updated 12/12/2013