All you need to know about a Scottish trust deed
Are you unable to settle your debts? Do you want to start afresh by writing off your debt legally? If you have unmanageable debts to different creditors, you can opt for a trust deed. A Scottish trust deed is a legally binding voluntary agreement between a borrower and a creditor, which usually lasts for a period of 4 years. This agreement allows you to repay only how much you can afford – which will be a fixed monthly payment. This amount can be calculated by taking into consideration what you have left after deducting your living expenses. After completing four years of the agreement, all the liabilities that were included in your trust deed will be waived off. This agreement can be carried out only through a licensed Insolvency Practitioner (IP).
Who qualifies for a Scottish trust deed?
Following are the qualification criteria for a Scottish trust deed
- You must be a resident of Scotland or have lived in Scotland for at least the last 12 months.
- Your unsecured debts must be over £5000.
- You qualify only if you’re unable to pay off your debts (credit cards, overdrafts, tax arrears, HMRC debts, unsecured bank loans etc.)
- You should be in a position to pay monthly installments of a realistic amount over a period of 4 years.
It is crucial to hire a reputable debt advisor to assist you understand a trust deed. Sometimes your situation could be different from others. Do not rush and make hasty decisions. Think of all the possibilities and choose the best solution for you. Visiting debtfreelife.co.uk can help you decide what you should opt for.
What if you do not qualify for a trust deed?
Unfortunately, not everyone will qualify for a trust deed. Sometimes even if you qualify, your creditors might not agree to the amount that has to be paid every month. But don’t lose heart; the government has introduced many schemes to assist the citizens who are in need. If you have very less disposable income and no assets, you can opt for bankruptcy. Sometimes your disposable income would be more than your debt level. In such cases, you could opt for a Debt Arrangement Scheme (DAS). Other schemes available are Individual Voluntary Agreement (IVA), Debt Management Plan (DMP), consolidation loan and Sequestration. Speak to your consultant to find out which option suits your situation best.
What are the benefits of a Scottish trust deed?
Numerous Scottish citizens have benefitted from a trust deed. Take a look its advantages to understand how it could help you.
- The amount to be paid on a monthly basis is calculated by keeping in mind how much you can afford. This will help you to pay your debts with ease, and you can become debt-free in 4 years.
- Once you sign the agreement, your existing debt won’t be considered, which means you don’t have to bother about the interest rates!
- Your lenders cannot take legal action against you, as a trust deed is a legal contract between you and them. However, you must pay the decided amount on a monthly basis.
- The most important advantage is the fact that the extra debt will be written off once you complete paying the stipulated amount.
- You will be able to protect your home and your car.
- You will be able to manage your finances more efficiently once you’re given a chance to pay off your debts.
Important things to note
Before choosing this option, you must be aware of a few things. Once you opt for a trust deed, your credit rating could be affected. Due to this, you will find it difficult to get another loan or a credit card. Secondly, your name will appear on a register called ‘Register of Insolvencies’. This is accessible to the public, so if anyone is specifically looking for information about you, they will know about your debt if they find your name on the register. If you’re a homeowner with equity, you cannot exclude assets from your trust deed. This means a homeowner should release all the equity they have to pay the lenders. However, there are some options to avoid selling your home, for instance, you could ask a third-party member to remortgage your home. Nevertheless, a trust deed is a great option to consider if you want to write-off your debt. Talking to your debt advisor could give you more clarity about the most appropriate debt solution.
How to choose a trust deed firm?
Did you know that there are over 7000 people in Scotland who opt for trust deeds? You might easily come across a friend who can share their experience with you. Asking them for recommendations is one of the easiest ways to choose a good debt firm. You can also browse the web or look for advertisements in local newspapers about reputable companies that provide exceptional debt solutions. Read their testimonials to see how many people have been satisfied with their services. Once you have shortlisted a couple of companies, speak to them, and understand how their policies can help your financial situation. The calculations of the monthly payment could vary from company to company. Choose a company that gives you a realistic figure which you can easily afford. Don’t forget to calculate their fees as well!
How to rebuild your finances after a trust deed?
On completion of the duration of the trust deed, you will definitely heave a sigh of relief. With this experience, you will know how to be more careful with your expenses and how you can save more. The next step is to slowly build your finances and improve your credit rating carefully. The key is to try saving more and spending less. You could do this by not using your credit card often, or by applying for a credit card that has a low monthly limit. If you have a mortgage or other payments, remember to pay them on time.