Write Off A Proportion Of Your Debt Within 36 Months
What is a Trust Deed?
A Trust Deed is a legally binding and formal voluntary agreement, used in Scotland, which allows your Trustee to take over responsibility for dealing with all of your creditors.
You no longer make payments directly to your creditors. Instead, you make one payment to the trustee who distributes the money fairly between all creditors bound by the scheme.
How does a Trust Deed work?
After the Trust Deed is signed, the Trustee will write to all your creditors. Unless creditors, who are owed more than one third of the total debt, or the majority of creditors by number object, the Trust Deed will become protected, which will prevent your creditors from from taking any further action against you. Generally if the creditors are offered 10% of the amount outstanding they will accept the Trust Deed.
Once you have been accepted on a Trust Deed, any correspondence from your creditors should be passed to your Trustee to deal with. Whilst your Trustee will deal with all your creditoes, you will still need to continue to pay your mortgage and any other ongoing living expenses. Only creditors that agree to the trust deed are bound by its terms.
Benefits Of A Trust Deed
- You no longer have to deal with your creditors - Your Trustee does that for you
- If you are in financial difficulty, you can sign a Trust Deed immediately
- Once the Trust Deed has become protected your creditors cannot arrest your earnings or take further action against you
- There is no need for your employers to know that you have signed a Trust Deed, unless they are creditors of yours or you have a professional or legal obligation to tell them
- A Trust Deed will normally only last three years and after that the remaining debts are effectively written off
- Your credit rating is not automatically affected by signing a Trust Deed
- There are no court proceedings involved
Disadvantages of a trust deed
You cannot take out credit over £250 during the trust deed period
Only the creditors who agree to the terms are bound by the trust deed.
If you do not cooperate with the trustee, they can try to make you bankrupt
You cannot be a director of a limited company, you can act as a director if the company's articles of association are changed to reflect this.
Frequently Asked Questions
How much does a Trust Deed cost?
There are no initial costs in setting up a Trust Deed. If you start your Trust Deed, you Trustee's fees and other expenses will be paid from contributions from your income. If you have insufficient income or assets it is unlikely that a Trust Deed will be possible. Why not call us today for free help and advice on 0800 228 9 228 and we'll be happy to discuss any questions you may have.
What about my furniture and car?
You are allowed to retain all basic household items. You can keep your TV, computer, ect.You can keep you're car as long as it is not of a very high specification and value and if you need it for work or family purposes. If it is of high specification and value then you will be made to downsize.
Will my home have to be sold?
It is extremely unlikely that your home will be sold, unless you agree to it. If you have enough equity in your house, it is usually possible to agree some other way of releasing this balance without having to sell it.
How long will it last?
A Trust Deed lasts three years
Can I have a bank account?
Yes, although the bank account should be a basic account which offers you no credit or lending facilities.
Is there anything else I can or cannot do?
You can act as a director of a limited company, if the company's articles of association are changed to reflect this.
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