For people who are living in Scotland and who are struggling with their debts, then a Scottish trust deed may be of help to you.
There are some debt solutions available to Scots which are unavailable anywhere else and they include a trust deed.
There’s also a debt arrangement scheme, which is run by the Scottish government, and sequestration, which is bankruptcy.
However, a trust deed is a voluntary agreement that is made between you and your creditors, that is the people you owe money to.
Under the agreement, you will pay a regular amount of cash to help clear your debts and when the agreement ends any amount remaining will be written off.
Under the terms of the agreement, this amount is considered to be unaffordable.
A Scottish trust deed
With a Scottish trust deed your property, and your belongings, better known as your assets, are passed to someone who looks after your financial affairs and they are known as a trustee.
It’s this trustee who will repay your creditors as much of your debt that’s possible.
In some instances this may mean selling property or belongings to raise money to repay your creditors.
The attraction for a trust deed is that if those creditors are happy with the terms, then it will become a protected trust deed.
A protected trust deed means that the agreement is binding on all creditors who then cannot take steps to recover money owed to them.
Obviously, if a trust deed is protected it means that the creditors are not bound by these terms could still take action to recover monies.
The trust deed as a debt solution
If the trust deed as a debt solution sounds like an attractive proposition to you, then it’s a good idea to get advice from a debt adviser who will be able to explain more and discuss other potential solutions.
Before you do so, it’s important to understand that a trust deed is only available to those who have debts of £5,000 or more and you have enough money to make these regular payments.
Unfortunately, if your only income is from benefits, then you will be unable to set up a trust deed.
Once the trust deed is in place, the creditors will be prevented from contacting you and there will be no more enforcement action.
Interested in a trust deed
There are other reasons why someone may be interested in a trust deed and one of them is that they will not be barred from certain types of public office or employment, which would occur under sequestration.
Also, you are not prevented legally from borrowing money, such as a credit card or a mortgage, but this may become more difficult to obtain.
As with all financial arrangements, there are some disadvantages and you will need to maintain the terms of the agreement for at least four years.
Also, your credit rating will be affected for up to 6 years after the trust deed begins.
Also, unless your trust deed terms allow it, you cannot be the director of a limited company and you may not be able to run your own business as a self-employed person.
Essentially, the trustee may arrange for someone to run the business or organise the selling of it.
Undertaking a Scottish trust deed
There’s a lot to recommend undertaking a Scottish trust deed for someone who lives in Scotland and has substantial debts and for more help and advice about the advantages and disadvantages, then it’s time to speak with the friendly team of debt advisers at Scotland’s Trust Deed.