Scottish trust deeds are insolvency option for individuals in Scotland and are a less serious option for those would like to stay clear of going bankrupt.
In this hard financial climate a growing number of people are getting into more debt and some even owe lenders more than they make in a year.
Getting help with your personal debt is important as the current unfortunate economic climate is not maintainable and is most likely to get worse as time goes on.
A protected trust deed is just one of the options available for Scots and it’s a good choice for avoiding bankruptcy.
Do I have to owe a specific amount? There’s so much conflicting information on trust deeds. Some sources say you have to owe at least â¤ 5000 and some say â¤ 10,000. Trust deed terms vary from one person to another but most have the same condition: that you owe at least 2 creditors. What debts are included in a trust deed?
Scottish trust deeds only include unsecured debts, such as store cards, credit cards, overdrafts and loans.
Secured debt like that taken out on assets like a house can not be added to your trust deed.
How much will I have to pay?
Your monthly payments depend on a number of factors such as your creditors, the amount of money you currently owe and your income.
After looking at your income and outgoings your trustee will decide on your disposable income, which will go towards paying your trust deed each month.
This figure will allow you to cover essential household bills, like utility bills, rent/mortgage, food and so on.
However you still have to have some disposable income at the end of the month to make a trust deed possible. Expect to pay at least â¤ 150 per month.
How long does it last?
Most trust deeds are set up over 3 years but in rare cases this could be longer. You could pay your debt off sooner if you are given a large amount of cash like winning the lottery or recieving a large sum in a will.
Is my trust deed protected and when from?
Once your trustee is happy with the proposal, it will be sent to the lenders for approval and posted in the Edinburgh Gazette.
Your lenders will have 5 weeks to object to the trust deed but as long as 67 % of your creditors agree, your trust deed will become protected even from those that objected to it.
8 weeks is the time it can take to have your trust deed set up.
What happens at the end of the trust deed?
After 3 years of paying your monthly installments on time and in full, your remaining financial debt will be wiped clean.
Gaining credit after a trust deed could be hard but there are several options available to start rebuilding your credit score. Ask your trustee for advice.
What do I do next to start a trust deed?
Contact a Bankruptcy Practitioner (IP) to act as your trustee.
They will look at your situation and establish whether a trust deed is the right option for you.