How Does A Trust Deed Work?
How Does A Trust Deed Work?
With A Trust Deed You Could Write Off Your Unaffordable Debt
Table of Contents
How Do Trust Deeds Work?
A Trust Deed can be a great, positive way to help with your debt. Allowing you to continue living your life without the stress of being chased by your creditors
A Trust Deed is a debt solution where you agree with your creditors to pay all or part of your debts. This agreement is set up and managed by a Trustee, otherwise known as an Insolvency Practitioner (IP), who will receive an agreed monthly payment from you and will divide it amongst your creditors.
If you apply for a Trust Deed ,then this agreement could allow you to write off up to 81% of your total debt based on government legislation and will often give you a greater level of control than sequestration.
Once your Trust Deed has been agreed and set up, your creditors can no longer take action against you and won’t be able to contact you, but it will affect your credit rating for six years, making it difficult to get further credit during this period. Your details will also be placed on The Register of Insolvencies, which is a public record, while you clear your debts.
For the duration of your Trust Deed, all fees and interest relating to your debt is frozen and once completed, the remainder of your debt is written off, allowing you to begin again, debt free.
This debt solution is available to residents of Scotland only. If you are a resident of England, Wales or Northern Ireland, then visit our sister site IVA4Me.co.uk to find out how an IVA works.
Who Qualifies For A Trust Deed?
In order to qualify for a Scottish Trust Deed, you must meet the following criteria:
Be a resident of Scotland, now or in the last 12 months
Have unsecured debts of at least £5,000
Have sufficient income to pay a monthly contribution. The Trust Deed should allow for at least 10% of your debt to be repaid
Be unable to pay your debts since the value of your credit is greater than that of your assets
What Will Happen To My Assets?
First of all, when we talk about assets, we are talking about items of significant value e.g. property and vehicle.
When you enter into a Trust Deed you are essentially agreeing for your Trustee to take control of these items in order to either sell them, in the case of a vehicle, or to release any equity, in the case of property, to offset against your debt.
Your individual circumstances will be assessed by your Insolvency Pracitioner in order to gauge how much you can afford towards a monthly contribution and what, if any, assets you may have to relinquish.
How Does A Trust Deed Become Protected?
During the application of your Trust Deed, your Insolvency Practitioner will contact your creditors to inform them of the proposed agreement. You creditors have 5 weeks to respond. In the absence of a response, your IP will assume they have no objection.
In order for your Trust Deed to become ‘protected’ the following circumstance must be avoided:
- At least half of the creditors object to the proposal.
- Creditors, who hold more than one third of the total debt owed, object to the proposal.
What Types of Debt Can Be Included in a Trust Deed?
Many kinds of debts can be included in a Trust Deed. It is important to realise that this is not limited to borrowings to finance companies but can also include HMRC debts, Council Tax debts and even debts to friends or family. It is, however limited to unsecured debts, so any debt secured against a property or vehicle, for example, would not be allowed to be included.
During the initial application process, your advisor and Trustee will be able to offer you advice regarding which of your creditors will be able to be included in the Trust Deed arrangement.
Trust Deed Guides and Information
What Is A Trust Deed?
Only available to residents of Scotland, a Trust Deed is a legally binding, formal debt solution. It is designed for people who are struggling with debts of £5,000 or over.
Is A Trust Deed Right For You?
Whether a Trust Deed is right for you or not will largely depend on your personal situation e.g. debt level, number of creditors, affordability etc.
Does A Trust Deed Have Fees?
Setting up a Trust Deed does incur some costs; however, you will not be expected to pay anything up front at the beginning of the arrangement and there will be no surprise costs at the end of the arrangement.
How Does A Trust Deed Work?
A Trust Deed is a debt solution where you agree with your creditors to pay all or part of your debts. This agreement is set up and managed by a Trustee, who will receive an agreed monthly payment from you and will divide it amongst your creditors.
How Do I Apply For A Trust Deed?
Signing up to a debt solution is a significant event in your life, so it is important to gather as much information as possible, so you can make an informed decision.
Trust Deed Pros and Cons
Like things in life, Trust Deeds carry with with them benefits and things to consider. Take a look at our article to find out whether a Trust Deed is right for you.
Trust Deeds – Which Debts Can Be Included?
Many kinds of debts can be included in a Trust Deed. They are limited to unsecured debts but by solving your unsecured debt problems, you may find paying any secured debt much easier.
