What is a Trust Deed?
A Trust Deed is only available to residents of Scotland or if Scotland has been your main country of residence prior to the date the trust deed is signed. They are often described as being very similar to an IVA
in that it is legally binding agreement between an individual, there creditors and a licensed insolvency practitioner.
Assuming you meet certain criteria a trust deed will be registered as “Protected”, meaning all your unsecured creditors are bound by the agreement and must not contact you and that interest and charges on your debts will be frozen for the duration of the trust deed.
How does a Trust Deed work?
The criteria for entering into a trust deed are very straightforward as each proposal is assessed individually and is based on your own unique set of circumstances. Whilst there are no set requirements for minimum debt levels or monthly contribution, it should be noted that only residents of Scotland can enter into a trust deed and only unsecured debts can be included.
While a trust deed is one of the more formal Debt Solutions
and will form a legally binding agreement between you and your creditors, it is not as formal as Bankruptcy
. There will be no court involvement in setting up the deed and it is usually a lot more flexible and less expensive to administer than bankruptcy proceedings. Trust deeds are not made public knowledge so will not published in local newspapers and they will also allow the individual to hold public office, which may not be the case with bankruptcy.
Once you have signed the trust deed, you will be bound to the terms of your agreement for the entire term (usually 3 years). During the deed, pressure from your unsecured creditors will be eased, with all correspondence and payment queries greatly reduced. In addition, if the trust deed can be registered as "Protected" your creditors will be prevented from taking any further legal action against you and will also ensure that interest on the registered debts is frozen for the term of the agreement.
Is a Trust Deed right for me?
A trust deed is not an ideal solution for everyone and you should always get some trusted Debt Advice before you enter into any formal agreements.
Entering into a trust deed will certainly affect your credit rating for a number of years and failure to maintain the agreed repayments may even result in Bankruptcy proceeding being taken against you by one or several of your creditors. It is very important to remember that you will need to stick to your strict budget throughout and that your income and expenditure will be reviewed regularly.
In addition, all of you assets and liabilities will have to be declared, before anything is agreed and if you are a homeowner you will often be required to release any equity in your property and other major assets.
To get further advice on trust deeds or your alternatives such as Debt Management or Debt Consolidation don’t hesitate to call one of our trained debt planners for more information. Call us directly on 0161 8500138 or Apply Online today.
Please remember repaying debts over a longer period can increase the total amount repaid and may affect your ability to obtain further credit in the future. Fees will be payable for all services provided in relation to all the debt solution detailed on this site.
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