A Scottish Trust Deed is an legally binding agreement betwen you and your creditors to repay a more affordable amount back to your debts over a set period (typically 48 months). The Government introduced revised legislation in 2013 to help people who were struggling to repay debts to their creditors.
The process is simple; you make one lower affordable monthly repayment towards your debts for a set period (usually 4 years*), and after that time, then as long as you have met your obligations, you are discharged and not responsible for any remaining debt due to those creditors, thus affecting writing them off. It can be a powerful tool for those who are struggling to make thier minimum repayments on their debts.
How Do I Check If I Qualify?
Fill out our form to see if you qualify. We will then contact you and go through a financial statement with you to calculate a repayment figure which you can comfortably afford. Once this has been agreed the relevant paperwork will be sent to you which you must sign and return.
Once the paperwork has been received us, we will begin to process you application, this usually takes six-eight weeks. When you first sign the agreement with your Insolvency Practitioner, who is an insolvency practitioner you have nominated, will notify the AiB (Accountant in Bankruptcy).
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What Happens Next?
They will enter the details onto the Register of Insolvencies. The Trustee (Insolvency Practioner) must then, within seven days, notify all of your unsecured creditors, providing copies of the Trust Deed, the Register of Insolvencies entry, a claim form and a detailed statement of affairs, which will tell creditors all about your financial position, any excluded assets, any payments you have agreed to make and the likely outlays and distribution prospects.
They then have until five weeks from the date that your details were entered onto the Register of Insolvencies to object to the Trust Deed becoming Protected.
Anyone who does not respond is treated as having acceded to the Trust Deed becoming Protected. If, by the end of the five weeks, less than half in number or one third in value of your creditors have objected, then the Insolvency Practioner must notify the Accountant in Bankruptcy as soon as possible but within a further four weeks.
If the AiB is happy that the correct disclosure has been made, the procedure has been followed and enough creditors have acceded to the Trust Deed, she will record it in the Register of Insolvencies. This means that it is binding and as long as you complete your obligations you will be discharged from your debts after 48 months.
How Long Does The Trust Deed Scheme Term Last?
*The typical period for a Scottish Trust Deed is 48 months, although in certain circumstances if you can repay creditors earlier or if you have a property to sell it may be possible to finish earlier.
In contrast, if you will struggle to complete your obligations in 48 months, or if you arrange to make additional payments in place of the equity in your heritable property, it may be possible to arrange a longer period if reasonable and appropriate.
What About Obtaining Further Credit?
Once the Trust Deed is granted you will be bound by the terms of the agreement. You must make the agreed repayments every month for the duration of the plan (usually 48 months*) and you will not be allowed to obtain any further credit until this period has elapsed.
Once this period is over you will be discharged from your debts and you will be free to obtain credit again. You should be aware, however, that granting a Trust Deed is an admission of apparent insolvency and it will have an impact on your ability to obtain credit in future.
You may not be able to obtain credit immediately after you are discharged from your Trust Deed and you may find credit more expensive for some time after your discharge. The decision to offer credit and the charges made for it will depend on the policies operated by individual lenders.
Will a Trust Deed affect my mortgage?
credit rating – having a trust deed will affect your credit rating for 6 years from the date the trust deed begins. This can make it harder to get credit like a mortgage or a loan in the future. selling your belongings and property – you may have to sell some of the things you own (your assets) such as your home.
Does a Trust Deed affect credit rating?
Yes a Trust Deed does affect your credit rating because you are breaching the original contractual terms of the credit agreement. It’s important to remember, if you have already missed payments or have been paying reduced amounts to your creditors then your credit rating may already have been adversely affected.
How does a Scottish Trust Deed work?
For more detailed information, please check our dedicated page on this topic: How Does a Scottish Trust Deed Work?
In brief, A Protected Trust Deed is a legally binding agreement between you and the people you owe money to (creditors) to pay back only what you can reasonably afford towards your debts over a set period. You will make one lower, affordable monthly repayment for a typical period of 48 months. Any remaining debt left at the end of the term is legally written off.
A Trust Deed can be extended for a longer duration depending on your circumstances. Whilst the minimum debt level is £5,000 the typical average debt owed by Harper McDermott customers is well over £20,000.
You may also qualify for other formal debt solutions, including the Debt Arrangement Scheme.
In order to find out whether a Scottish Trust Deed is right for you, we would always recommend chatting through your situation with an experienced debt adviser. This will ensure that you get well-informed tailored advice, that allows you to make a decision in your own time, knowing all the facts and considerations.
How do I apply for a Scottish Trust Deed?
Simply use our Trust Deed Calculator here. Based on the information you provide, we calculate whether you could qualify for a Protected Trust Deed or any other alternative formal Scottish debt solution. We will then contact you to begin finding out more about you. Alternatively, you can now set up a debt solution over WhatsApp.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here