How does a Trust Deed work?
A Trust Deed is a formal agreement between you and your lenders which can help you avoid bankruptcy. As long as your lenders agree to the arrangement, and you pay as much as you can for four years, the rest of your unsecured debt is written off at the end of the agreement.
During a Trust Deed, all payments to the unsecured debts (personal loans, credit cards, overdrafts etc.) included in it will be replaced with just one affordable monthly payment to us. This new payment will be based on how much money you have left after you've covered your other essential living costs. From this payment, we'll pass on an agreed amount to each of your lenders.
Once your Trust Deed comes to a successful end, any unsecured debt that hasn't been repaid will be written off for good.
However, if your Trust Deed fails for any reason, it may lead to Bankruptcy.
Do I qualify for a Trust Deed?
You'll only qualify for a Trust Deed if you really can't afford to repay your unsecured debts of at least £5,000 within a reasonable period of time. However, you must still be able to afford smaller monthly payments.
Even if you do qualify, your Trust Deed will still have to be approved by at least 50% of your lenders who own at least one third of your total unsecured debt. Once it has been approved it becomes a 'Protected Trust Deed', which means you are legally protected against further action from your lenders.
Your lenders are not guaranteed to accept your Trust Deed proposal. But, in reality, they will probably agree as long as you really can't afford to repay your debts any other way.
Not sure whether you qualify? Request a callback for a quick assessment, or call us on 0161 667 2599 to discuss your options with our friendly debt advisors.Find out more about qualifying for a Trust Deed here.
Who is the Insolvency Practitioner and what do they do?
The Insolvency Practitioner, or IP, is the person who oversees your Trust Deed. They contact your lenders to explain why it's the right option for everyone involved. Once the Protected Trust Deed has been agreed, they'll make sure everything runs smoothly until it comes to an end.
With us, you may never actually speak to your IP - our Relationship Managers will take care of any issues or queries you have, and pass on the necessary information to the IP. This helps us to ensure things are taken care of as quickly as possible.
How much does a Trust Deed cost?
There are fees for entering a Trust Deed with us and these follow a set structure depending on your individual circumstances. You will receive full information once it’s been agreed that a Trust Deed is suitable for you. Your fees won't affect how much you pay. You will still only ever pay as much as you can realistically afford each month. We simply take our fee from each monthly payment you make, to cover the service we provide. Learn more about the fees for our debt solutions.
Will a Trust Deed affect my credit rating?
Like most debt solutions, a Trust Deed will have an impact on your credit rating in the medium to long term. Your name will appear on the Register of Insolvencies and your Trust Deed will be visible to future lenders on your credit score for up to six years after it starts, and obtaining further credit will be more difficult in the medium to long term.
Part of your Trust Deed arrangement may include releasing equity in your property. You may find it difficult to remortgage, or have to pay a higher rate of interest, due to your Trust Deed’s impact on your credit rating. If you are unable to release equity, you may have to make additional monthly repayments for up to 12 months.
What are the alternatives to a Scottish Trust Deed?
If a Trust Deed isn't right for you, we offer several other debt solutions that could help. These include:
To find out which debt solutions could help you, request a callback. Alternatively, call us on 0161 667 2599 and one of our expert advisors will help you decide what to do next.