Trust Deed – Scotland
DEBT SOLUTIONS: Trust Deed in Scotland
Trust Deed: A debt solution for individuals living in Scotland, offering tailored debt advice and acting as a debt relief tool. It provides you with free debt advice, helping you manage and eventually resolve your financial situation.
A Trust Deed offers a debt solution in Scotland, merging multiple unsustainable debt repayments into one monthly payment, potentially erasing up to 70% of unsecured debts for Scottish residents.
What is a Trust Deed in Scotland?
A Trust Deed is a financial tool in Scotland that can help you in reducing your debt repayments to a single, more manageable monthly payment while also allowing you to write off up to 70% of unsecured debts. The Protected Trust Deed serves as a formal and legally binding agreement between you and your creditors. This solution is exclusively available to Scottish residents and typically lasts for four years, although the repayment period may vary depending on your circumstances.
Trust Deeds are tailored to assist those with a debt amount over £5,000 who find it difficult to repay their debts. To find out if you qualify for debt reduction with Trust Deed Wizard, take a moment to check your eligibility.
Understanding the Objective of a Trust Deed
A Trust Deed serves to assist individuals struggling with debt in gradually repaying their dues through manageable monthly instalments. This option is particularly beneficial for those who have debts but receive a consistent income to put towards their outstanding balances.
Considering a Trust Deed could be a valuable debt resolution for you if:
- You reside in Scotland
- You have £5,000 or more in debts
- You have a steady income source and can maintain monthly repayments
It is crucial to note that this approach is exclusively accessible to Scottish residents. If you are located in England or Wales, alternative debt solutions such as an Individual Voluntary Arrangement (IVA), Debt Management Plan, or Debt Arrangement Scheme (DAS) may better suit your situation.
Establishing a Trust Deed
To set up a Trust Deed, you must first engage a licensed insolvency practitioner (IP) who will act as the trustee for the arrangement. They will assist you in creating a repayment proposal which shall be presented to your creditors. If everyone agrees to the Trust Deed terms, your IP will manage it on your behalf. This involves overseeing monthly payments and distributing them amongst your creditors, ensuring your assets and financial agreements are in line with the legally binding agreement you and your lenders have consented to.
Pondering a Trust Deed?
Utilise our straightforward debt solution finder to discover the ideal option for your situation. We’ve successfully guided over 35,000 Scots toward debt relief.
Differences Between Trust Deeds and Protected Trust Deeds
In a Trust Deed, you make a single monthly payment towards your debts based on what you can afford, with any remaining debt written off at the end of the term (subject to exceptions). However, not all Trust Deeds offer the same protections.
Protected Trust Deeds are legally binding agreements between you and your creditors. With this protection, you’re safeguarded against any legal action from creditors and any additional interest fees or charges on the included debts.
When you set up your agreement, your Insolvency Practitioner (IP) sends a proposal to your creditors. They have 5 weeks to raise any objections. If this period passes without objections or once any objections raised by creditors are resolved, your Trust Deed becomes protected. The protection rate refers to the number of Trust Deeds that become protected, offering you the benefits mentioned previously.
The Expense of a Trust Deed
Trust Deeds in Scotland come with various fees, such as the monthly repayment plan, Trustee fees, and administration costs. A licensed Insolvency Practitioner (IP) is required to set up a Trust Deed, and their service may incur a fee. However, some debt charities cover the cost of an IP.
Organisations like Carrington Dean offer free debt advice, and they only charge for managed debt solutions if you choose to proceed. Within Trust Deeds and other debt options, fees are incorporated into your monthly payment, which helps avoid substantial upfront charges. It’s important to consider the potential interest involved in these financial arrangements.
Duration of a Trust Deed
Trust Deeds typically last for four years, with 48 monthly payments. However, the duration can vary depending on factors such as debt level, income, and other circumstances.
An Illustration of Trust Deed Assistance
In some cases, Trust Deeds can be extended beyond the standard four years due to changes in your financial situation, although this is rare.
Let’s Assume You Owe…
Total Sum Due: £18,303
Customer Monthly Repayments Before and After a Trust Deed
A 70% Reduction in Repayments
Monthly payments are calculated by assessing your individual financial circumstances. By entering a Trust Deed, you can expect your monthly repayments to be reduced by approximately 70%. This allows you to make regular payments that are more in line with your disposable income. As a result, you’ll have a more manageable and affordable monthly payment towards your debt repayment. In summary, Trust Deeds can significantly ease the burden of debt repayments and help you regain control of your financial situation.
Retaining Your Home in a Trust Deed
As a homeowner involved in a Trust Deed, your property’s equity (the gap between your home’s value and the outstanding mortgage) is assessed at the beginning of the process. High equity means that it must be released to your Trustee for creditor payment.
A knowledgeable adviser will share various options for equity release, providing you with accurate information before you make any decisions on your home’s future.
Each Trust Deed is tailored specifically to the individual, and it is quite rare for your Trustee to mandate the sale of your property as part of the agreement.
Trust Deed Eligible Debts
A Trust Deed in Scotland mainly addresses unsecured debts, such as:
- Credit and store cards
- Bank overdrafts
- Catalogue debts
- Payday and bank loans
- Council tax arrears
- Utility bills
However, certain debts cannot be covered by a Trust Deed:
- Secured loans, mortgages, hire purchase agreements, and other loans secured on property, vehicles, or homes
- Court-issued fines
- Student loans
- Debts acquired fraudulently
- Crisis loans from the DWP’s Social Fund
Keep in mind that each case varies, so consult a professional for personalised advice.
How Trust Deeds Function
Step 1: Organising Your Agreement
Initially, contact an Insolvency Practitioner to discuss your financial situation. If you decide on a Trust Deed, they will become your Trustee. Together, you will review your financial circumstances and establish a reasonable budget, determining your affordable monthly payment towards debts.
Step 2: Securing Creditors’ Consent
After signing the Trust Deed, your Trustee submits a proposal to creditors. This outlines your proposed payment and expected returns for creditors over time, and addresses any assets you own. The Trust Deed is then advertised on the Register of Insolvencies, providing creditors a five-week review period for acceptance or objection.
If no objections or the objections don’t constitute the majority of debts, the Trust Deed becomes protected. Unresponsive creditors are considered to have agreed. If there are sufficient objections, the Trust Deed fails, and your Trustee resigns, offering further debt advice.
Step 3: Maintaining Monthly Payments
With a protected Trust Deed, creditors can’t pursue legal action to reclaim debts. You must consistently meet monthly payments throughout your term.
Step 4: Discharge from the Agreement
Upon completion of the repayment term (usually four years), you will receive a discharge certificate, and included creditors must write off any outstanding debt.
Benefits of a Trust Deed – Scotland
- Prevents bankruptcy by consolidating debts
- No initial fees for Trust Deed setup
- Single, manageable monthly debt repayment
- Clear repayment timeline (typically four years)
- Prevents additional interest on debts
- Protects against legal action by creditors
- Remaining unsecured debts are written off upon successful completion
- Minimal impact on employment
Drawbacks of a Trust Deed – Scotland
- Negatively affects credit rating for six years
- May need to release home equity for creditor payments
- Applicable only to Scottish residents
- Creditors may reject the Trust Deed proposition
- Limited financial freedom during the agreement
- Risk of bankruptcy if the arrangement fails
- Potential for higher interest rates on remortgages, or extending the Trust Deed by 12 months if remortgaging isn’t available
- Only unsecured debts included in Trust Deed are written off
Exploring the Trust Deed Register and Its Accessibility
The Trust Deed Register, officially referred to as the Register of Insolvencies, is a public record overseen by the Accountant in Bankruptcy, which serves as Scotland’s Insolvency Service. The register contains a record of all insolvencies in Scotland, encompassing both individuals and businesses.
When you have an active Trust Deed, your arrangement’s details are listed on the register. As the Register of Insolvencies is a public document, it can be accessed online and searched by anyone. This implies that, technically, members of the public might discover the following details about your Trust Deed:
- Your name and address
- Trustee information
- Commencement date of the arrangement
- Discharge date (if applicable)
However, it should be noted that while it’s possible for the public to find out about your Trust Deed, the likelihood of them doing so is quite low.
Typically, only those individuals who have a specific reason to search the register, like creditors, credit reference agencies, and future lenders, will discover your arrangement.
How Trust Deeds Influence Credit Ratings
A Trust Deed can negatively impact your credit rating for six years from its start date. This may cause difficulty in acquiring credit like mortgages or loans in future. Nonetheless, it’s worth noting that missed debt repayments could have already harmed your credit rating. To assess your credit score, consider using companies such as Experian.
Why Opt for Carrington Dean for Trust Deeds?
At Carrington Dean, we acknowledge that debt can be overwhelming, and finding the right support is crucial. Our team is committed to assisting you, regardless of your situation.
Our approachable advisers endeavour to provide top-notch advice to individuals seeking financial assistance. We provide recommendations or guidance on debt relief solutions that can enable you to eliminate unaffordable debt, halt interest and charges, and lower your monthly repayments.
As specialists in the field, we are recognised as Scotland’s leading Trust Deed company. With a 99% protection rate for our Trust Deeds, we have aided numerous individuals in escaping legal or enforcement threats from creditors and moving past their debt.
Essential Points to Remember
- Exclusive to Scottish residents
- Consolidates unmanageable debts
- Generally lasts for four years
- Established through a licensed insolvency practitioner (IP)
- Applicable to unsecured debts only
Rest assured that Carrington Dean’s track record and commitment to helping clients have earned us positive feedback on Trustpilot.
Frequently Asked Questions
Alternative Debt Solutions
If you’re considering a debt arrangement scheme (DAS), it’s essential to explore the various options and seek advice from a qualified debt adviser or money adviser. MoneyHelper is an excellent resource for free advice and guidance on managing your finances. Here are some common questions regarding debt solutions:
Q: What if creditors continue to contact me during a Trust Deed?
A: Once a Trust Deed is protected, your Trustee will handle all communication with creditors on your behalf. If you receive any calls or letters from creditors, you can refer them to your Trustee.
Q: Can a Trust Deed be cancelled once signed?
A: Trust Deeds are legally binding, so they cannot be cancelled after signing. It’s crucial to understand the terms and conditions before entering into a Trust Deed.
Q: Are there fees involved in a Trust Deed, and when are they charged?
A: While there are fees associated with a Trust Deed, they are deducted from your monthly payments or the sale of an asset (if applicable). There are no upfront fees.
Q: Are Trust Deeds specific to Scottish residents?
A: Yes, Trust Deeds are only available for residents of Scotland who have lived in the country for at least six months. Individuals residing in England or Wales may consider an Individual Voluntary Arrangement (IVA) as an alternative.
Q: How much debt is required to qualify for a Trust Deed?
A: Generally, you need to have over £5,000 in unsecured debt for a Trust Deed to be considered, but other factors also influence the choice of debt solution.
Q: Can secured loans be included in a Trust Deed?
A: No, only unsecured debts can be included. Mortgage, secured loans, and hire purchase agreements are not eligible as they are secured against assets.
Q: What happens if I can’t keep up with Trust Deed payments?
A: If you’re unable to make the required payments, your Trustee may try to recoup payments by contacting your employer. Make sure to check your employment contract for any potential conflicts.
Q: Will a Trust Deed affect my home ownership?
A: If you’re a homeowner, the level of equity in your home is assessed during the process. High equity must be released to your Trustee to be paid to your creditors. However, it is improbable that a Trust Deed will force you to sell your home.
Q: How soon can a Trust Deed be set up once I’ve decided on this option?
A: After collecting the necessary information and considering all factors, a Trust Deed can be established immediately.
Q: What happens if my Trust Deed is rejected?
A: In this case, your Trustee would resign, and you would receive additional advice regarding alternative debt solutions.
Q: Can I set up a Trust Deed on my own, without an Insolvency Practitioner?
A: No, Trust Deeds must be arranged and administered by a licensed Insolvency Practitioner.
Q: What should I do if I’m unhappy with my Trustee?
A: First, discuss your concerns with your Trustee. If they cannot resolve the issue, they may refer you to the governing body they are a member of for further assistance.
It is worth mentioning that all calls made to our support service are recorded for the purposes of enhancing training and monitoring quality. Moreover, this website utilises cookies, and by browsing our site, you agree to their placement on your computer or device.
For those interested in better money management and becoming debt-free, we recommend seeking guidance from Money Helper. This independent resource is designed to assist individuals in efficiently handling their finances.
Fees & Information
In your journey with our services, be assured that we will transparently communicate all fees. We strive to ensure clarity on how these charges are applied before engaging in any debt solution.
As a UK-based limited company, Carrington Dean specialises in insolvency solutions for individuals. They primarily focus on Trust Deeds, DAS (Debt Arrangement Scheme), and Sequestration. It’s important to note that they don’t provide advice on debt management plans or products.
The debt write-off could range between 25% and 70%, considering each customer’s unique financial situation and creditor approval. In the past 12 months, 15% of Trust Deed customers experienced the provided example.
All advice offered is tailored to formal options available in Scotland, prepared in reasonable contemplation of an appointment. Carrington Dean collects essential information through an initial fact-finding process to determine if an individual qualifies for Trust Deeds, DAS, or Sequestration and wishes to move forward.
Carrington Dean is authorised and regulated by the Financial Conduct Authority with FCA No: 674395. The company is registered in Scotland, with Company Registration No SC 225672, and its registered address is Regent House, 5th Floor, 76 Renfield Street, Glasgow, G2 1NQ. Insolvency Practitioner Samantha Warburton is also authorised in the UK with IP Number: 12430.
To maintain user privacy and compliance, the company adheres to policies such as:
- Terms and Conditions
Additionally, they provide resources like the Knowledge Hub, Creditors Guides, and information on fees to ensure customers are well-informed throughout the process.