What is a Trust Deed?
What is a Trust Deed? You might have read about them in the newspapers, but do you know what they really are?
Here's a brief description of how Trust Deeds work. For a more detailed explanation - or if you have any questions you need answering, talk to one of our experts. Just fill in the form for a free callback, or call us on freephone 0800 505 3839.
What is a Trust Deed?
A Protected Trust Deed is a type of insolvency that helps people face up to serious debt problems without entering bankruptcy. Like bankruptcy, though, it can actually write off some of their debt, meaning they won't have to pay it all back.
Could you benefit from a Trust Deed?
Trust Deeds aren't available to just anyone with debts. You might qualify for a Trust Deed if you can answer 'yes' to each of these questions:
• Do you live in Scotland?
• • Do you have individual unsecured debts of at least £5,000 or joint debts of at least £10,000?
• Are you unable to make your monthly payments to those lenders?
• Is your income reliable enough for you to make regular payments for the next three years?
Whatever your situation, it's important to get some professional debt advice if you're worried about your debts - even if you can't say 'yes' to these questions, we could still find you a debt solution that is suitable for you.
How does a Trust Deed actually work?
First of all, talk to an insolvency expert. You can fill in the fast-track callback form on this page or call us on freephone 0800 505 3839.
Once we've spoken to you about your situation (debts, expenditure, income, property, etc.), we'll know whether or not a Trust Deed is likely to be the best way for you to tackle your debts.
If it is, we can draw up a Trust Deed proposal that explains how we think a Trust Deed would work in your case. We'll share this with your unsecured lenders, who will have five weeks to respond. You need at least half of them to agree to the proposed terms - and they must be owed at least a third of your total debt. Any lender who doesn't reply within five weeks (of the day your Trust Deed is advertised in the Edinburgh Gazette) will be treated as if they had accepted the terms.
Once your Trust Deed has become Protected, all you have to do is stick to the terms agreed and make your payments. Do that and you will benefit from legal protection from your unsecured lenders - and once your Trust Deed reaches a successful conclusion, the included debt that you've not repaid will be written off.
What are the drawbacks of a Trust Deed?
First of all, a Trust Deed is a form of insolvency and will have an effect on your credit rating for six years, starting from the day it starts. This can make it harder to obtain further credit in that time.
Second, if you're a homeowner you may be required to release equity from your property so you can pay back more of the money you owe. If you can’t release equity then your Trust Deed can be extended by 12 months.
Finally, if your Trust Deed fails, you could be made bankrupt.
Article Updated 12/12/2013