A Scottish Trust Deed – what you need to know
A ‘Trust Deed’ is an agreement with the creditors to who you owe money to pay off what you can afford of your debt.
Fortunately, Scotland’s Trust Deed has a fantastic team who can support and guide you through every step of the process.
A Scottish trust deed is a less severe debt-solution route than sequestration (bankruptcy) and will avoid some of the legal restrictions and implications.
A Trust Deed will last, on average, for four years. After that time has ended, you will no longer be required to pay the rest of the debts involved in the Trust Deed and they will be written off.
You will be expected to pay an amount from your income to pay off some of your debts. The amount will be based on what you can reasonably afford after paying for your home, bills and necessities.
Some of your valuables (assets) may need to be given to the trustee of your Trust Deed. They will be sold to pay off a proportion of your debts.
Who is eligible for a Trust Deed?
- Your debts must be over £5,000
- You must have more than one debt.
- The applicant must be able to afford to pay back a minimum of 10p in every £1 they owe their creditors.
- You must live in Scotland
Why is a Trust Deed a good option for me?
- Interest and charges on your debt are not permitted once the creditor has agreed to your Trust Deed terms.
- If your Trust Deed becomes ‘protected’ even the creditors who did not agree to the terms must abide by them.
- Your creditors must communicate with your trustee, not you. The stress and worry of being hounded for money will be over.
- Unlike sequestration, you will be allowed a bank account with a debit card.
- Your employment will be unaffected except in very rare circumstances (check your contract of employment.)
- It is a flexible agreement that can be re-negotiated should your circumstances change.
- Your home may be protected from being sold to pay off your debts.
What are the negatives of a Trust Deed I should consider?
- Unless your Trust Deed becomes protected you will still have the creditors who did not agree to the terms to deal with and repay. Scotland’s Trust Deed can help you with this.
- Your financial freedom will be lost during the term of the Trust Deed. You must follow the advice of the trustee and do as they instruct, they can make you bankrupt if you don’t follow their rules.
- If you are the Director of a company this may have to end. Your Trustee and the rules of the company involved will decide.
- Your credit score and ability to get finance will be affected.
If you think that a trust deed is the right option for you, then you need to speak with the friendly team at Scotland’s Trust Deed as soon as possible. We look forward to helping you back on the road to financial stability.
Payday loans see complaints soar
If you live in Scotland and are struggling with your debts then an investigating into payday loans highlights that a Scottish Trust Deed will help you manage your debts.
The team at Scotland’s Trust Deed has always strongly encouraged our customers not to fall into a high-interest rate trap when applying for payday loans – and it’s sad to hear that official figures have reported a 130% rise in the number of complaints about payday loans last year.
The Financial Ombudsman has collated a report which states that between 2018 and 2019 there were 40,000 complaints made and most of these were about the affordability of the loans.
Debt management companies acting for their customers were the source of many of the complaints. It’s likely that the people they represent have turned to a payday loan company in desperation only to find themselves, very quickly, saddled with even more expensive debt.
The chief executive of the Financial Ombudsman Service, Caroline Wayman, said: “Too often we see that the interests of consumers are not hard-wired into financial services.”
Five-year high in the number of complaints
She said that financial services companies become so focused on the profits they can make that ‘they forget the moral obligation’ they have towards their customers. The five-year high in the number of complaints reported by the Ombudsman is proof that the problem is getting worse.
Ms Wayman said of the 14% increase in complaints from 2018-2019: “The behaviour we’ve seen from some businesses is simply not good enough.”
In defence of the short-term lending companies at the centre of the complaints, a spokeswoman from the Consumer Finance Association declared that the issues stemmed from the years before changes in regulation. She called the rise in complaints “disappointing” but that they were of “poor quality” and “had no foundation”.
Citizens Advice Scotland admitted that the biggest problems with payday loans were helped by the Financial Conduct Authority’s 2014 price cap and regulations. However, there are still clearly big issues which are causing misery and hardship for thousands of customers.
The charity suggests that the market is not operating fairly and ‘perhaps tighter regulation is needed.’
Scotland’s Trust Deed believes affordable credit options are needed
At Scotland’s Trust Deed we believe that affordable credit options are needed so that people can borrow without getting into a financial struggle. Advice and full explanations should be an intrinsic part of the borrowing process so that people understand what they are agreeing to.
The people who most need access to a fair and flexible lender such as a bank or building society are usually the people that are turned down by them. The reasons for the rejection of these loan applications are sound and based on affordability and responsible lending.
However, this doesn’t negate the fact that the loan is still needed by that individual. In desperation, they turn to unscrupulous loan companies who offer high-interest options that quickly become unaffordable.
Scotland’s Trust Deed has many years of experience with helping people who have found themselves in financial trouble. Debt advice and support are an important part of our service and we believe this ethos should be replicated in every area of the financial services industry.
If you need to discuss your debt problems then contact Scotland’s Trust Deed today.
What is the Debt Arrangement Scheme in Scotland?
A Debt Arrangement Scheme (DAS) is an initiative created by the Scottish Government to help people struggling with debt to regain control.
The DAS allows you to request the setting-up of a Debt Payment Programme (DPP) which allows you to pay off your debts by making affordable payments.
A DAS can only be arranged by a registered and approved professional company or organisation. Scotland’s Trust Deed can help you to navigate the process. So contact us as soon as you begin to struggle with debt since ignoring or avoiding the problem will simply make it worse.
The advantages of a DAS
Affordability. You will pay off your debts with a monthly amount that allows you enough money for everyday essentials and living costs. Also:
- Interest and charges will be stopped.
- Legal action and contact by and from your creditors will not be allowed.
- You can apply to pay extra, reduce your payments or even take a six-month payment break.
- The end of the DPP means the end of your debt.
The disadvantages of a DAS
- Your credit score will be affected for six years.
- Your DAS will appear on a public record.
- A proportion of your payments will be used for running costs.
- Not making payments will cancel the DAS and the adding of interest and court action by your creditors will then be allowed.
Who qualifies for a DAS?
- To find out if you qualify and are suitable for a DAS/DPP then contact a professional, expert company such as Scotland’s Trust Deed.
- You must live in Scotland. England has its own version of a DAS with a different set of rules and parameters.
- If you have extra income at the end of the month after paying for your home, bills and living cost then you may be suitable.
- You must have enough ‘extra’ to pay towards your debt this must be enough to pay off your debt in a reasonable length of time.
How is a DAS operated?
- An affordable payment is made into the DPP and that is then shared out amongst your creditors.
- You will have a trustee or ‘money advisor’ managing your case.
- The payments made will be paid to the people you owe money by the ‘payments distributor’ responsible for your case.
- The length of a DAS will vary depending on the size of your debt and the amount of ‘extra’ money you have each month. It will not usually last longer than 10 years. If longer is needed to clear your debt then a DAS may not be for you.
- Your DPP can be cleared by one big payment if desired.
What are the alternatives to a DAS?
If you do not qualify for a DAS/DPP then a Trust Deed (only in Scotland) or Sequestration (better known as bankruptcy) are the other options to investigate.
Contact experts such as Scotland’s Trust Deed for advice on the best way to clear your debts and start enjoying financial freedom again.
Problem debts affecting ‘700,000 Scots’
Scotland’s Trust Deed has been helping Scottish people with money troubles for many years. We have a huge amount of experience, knowledge and understanding of how to assist our customers to regain control, financial freedom and peace of mind.
A charity, which also offers debt advice, has reported that Scottish debt is on the increase. The organisation says it has helped over 30,000 people in the year 2018-2019 and have announced that the cost of these debts to the government was £750 million.
The people who were helped last year had only £12.64 left, on average, after paying for their homes, utility bill and taxes. The shortfall, to pay for food, transport and other essentials, was financed largely through credit cards, loans and overdrafts.
Families are finding themselves spiralling into debt
Low-income families are finding themselves spiralling into debt and the number struggling to cope, according to the charity’s figures, is around 700,000. The main source of debt is council tax with the average amount of arrears at £2,017.
The charity has called for local authorities to give people a ‘fair chance’ to pay their debts within an affordable time frame. Aggressive tactics to force payments with fines and threats of court action is ‘making the situation worse’.
A spokesman from Cosla, a local government organisation, has insisted that the situation is being taken seriously and that: “All councils will have plans and procedures in place to help people with their arrears.”
Research into debt in Scotland has found that poverty, low-quality housing, cuts to welfare, sickness and job losses are all to blame. The number of people falling behind with bills and turning to initiatives such as Debt Arrangement schemes (DAS), Trust Deeds and sequestration (bankruptcy) is rising.
Seek debt help and advice as soon as possible
Mental health issues such as depression and anxiety are closely connected to financial hardship. It is important that people seek debt help and advice as soon as possible. Ignoring or avoiding the problem will only make it worse and late payment fees, interest and stress can be avoided if the right steps are taken.
Sequestration is one option open to people with severe, unmanageable debt. It’s a huge step to take however and should be considered only as a last resort after DAS and Trust Deed routes have been explored first.
Scotland’s Trust Deed has a team of friendly, experienced, and impartial staff who are on hand to help those in debt with questions, advice and debt management services.
The advantages and disadvantages of sequestration
- It will clear any unsecured debt you can’t afford to pay.
- Your living costs will be easier to manage.
- Free of unsecured debt in one year.
- Legal protection from your creditors.
- You will make a regular, affordable payment toward your debt if you have a reliable income.
- Your assets can be sold off to pay off your debts.
- The sequestration will be recorded on the Insolvency Register.
- Employment opportunities may be affected in the two years after sequestration, certain jobs cannot be held by people who have been through sequestration and your self-employment may be curtailed.
- Your credit score will be affected for six years.
- Bonuses, windfalls and inheritance will need to be paid to the Trustee.
If you need help and advice about debt or sequestration from a trained advisor, then call Scotland’s Trust Deed today.
More hard-up Scots are opting for insolvency
Alarming figures for the financial year 2018/19 show that personal sequestrations (better known as bankruptcy) have risen by 5% in Scotland.
Even more worrying is that the number of bankruptcies in the first three months of this year have increased by 14% in comparison with the same time last year.
The Scottish Government has revealed that 13 Scots are going bankrupt every day due to various pressures including, they say, welfare cuts and the controversial roll-out of Universal Credit.
Businesses in trouble are also increasing in numbers with 9.3% more going bust in 2018/2019.
These official numbers from the government and the Accountant in Bankruptcy organisation tell the story of ordinary working people in crisis and financial hardship. These are people with families who need help to get themselves back on the road to a brighter future.
Best debt solving solution
Jamie Hepburn, the business secretary, has urged anyone struggling with money to seek advice as soon as possible and to choose the best debt solving solution for their individual circumstances.
The Debt Arrangement Scheme is a government-backed plan which individuals can utilise to get themselves back on track with debt without making the giant step into insolvency.
The number of people signing up for a Debt Arrangement Scheme with experienced companies such as Scotland’s Trust Deed has risen by 9.7% in the last financial year with £37.6 million being paid off personal debts. It’s encouraging that bankruptcy alternatives such as these are becoming more popular.
Jamie Hepburn has been quoted as saying “the challenging economic times we are facing” have led to “more Scots experiencing increased financial pressures.”
What to do if you’re struggling financially
- Don’t avoid the problem. The sooner you act the better as late payment fees, interest charges and fines won’t go away by themselves.
- Contact an expert. At Scotland’s Trust Deed our team has a huge amount of knowledge and experience.
- Make sure you choose the right debt management option for your circumstances. Sequestration should be the last resort.
- Trust Deeds are only available in Scotland and the number of them being set up has increased by a huge 40% in the last year.
- As suggested in this article, if you don’t qualify for a Protected Trust Deed, then a Debt Arrangement Scheme could be another powerful solution to your financial problems.
How does a Debt Arrangement Scheme (DAS) work?
- A DAS is a scheme backed by the Scottish government.
- Make lower payments over a longer time period so that your debt is more affordable.
- Unlike a Trust Deed you will be expected to pay your debts in full. There will be no negotiation with your creditors over having a proportion of your debt written off.
- You will regain control. Your payments per month will have been agreed by a DAS counsellor to ensure you can pay without struggling to pay the rest of your bills.
If you think that a Trust Deed or DAS might be the right option to put you back in control of your finances, then contact Scotland’s Trust Deed for friendly, expert and impartial advice.