Scottish trust deeds and employment

Debt can be a huge burden, especially when life throws you a curveball. If you’re struggling to keep up with your payments, a Scottish Trust Deed may be the answer to your prayers.

This simple debt management system allows you to pay off a manageable amount of your debt each month, with the remainder being written off at the end of the repayment term. 

While some people may worry about the effect a Scottish Trust Deed could have on their career or job prospects, others may feel embarrassed about their employer finding out they have had to enter a debt solution.

Find out below the effects entering into a trust deed can have on your career.

How does a Scottish trust deed work?

A trust deed is a voluntary binding legal agreement between you and all your creditors. It is an arrangement that allows you to make reduced affordable monthly repayments over a set period of time, usually 4 years, after which your unsecured debts are usually written off.

A trust deed is only available in Scotland and is an attractive option for people looking to escape out from under unmanageable unsecured debts. It provides guidance on how to effectively make a fresh start.

Trust deeds must be set up by an insolvency practitioner. They will work with you to draw up an affordable repayment to present to your creditors for approval.

Once the trust deed is in place, your creditors are legally bound by it and can no longer contact you or take any action against you for the outstanding debt.

Will my employer find out about my trust deed?

It is extremely unlikely that your employer will find out you have a Scottish trust deed. Yes, your name will be listed in the AIB register but, so is everyone else who has entered into a trust deed. This means your employer would have to actively scroll through thousands of names in order to find yours.

Your employer is not obliged to carry out a strict financial vetting procedure, the only times an employer is likely to find out about your trust deed is if you tell them yourself or if your job requires you to disclose this information.

Does my employer need to know I have a trust deed?

In some professions, you may be required to sign a contract prohibiting you from being involved in insolvency whilst in employment. If you do become involved in these situations, it may be considered a disciplinary offense.

The Police and The Prison Service are professions which have concerns about insolvency. This is because when you are struggling with unmanageable debt, you are more susceptible to corruption. Prison guards for example, given their privileged position, may try to take advantage of being in a position of power.

Similarly, jobs that require handling money or confidential information such as those in the financial sector, can put you at risk for blackmail. If you are employed in one of these professions and are considering a trust deed, you should speak to your employer about it first.

Could I lose my job if I have a trust deed?

It is unlikely that you would lose your job for entering into a Trust Deed as long as it doesn’t impact your ability to carry out your job. If you are in a profession where it is stated in your terms of employment that you can’t be insolvent, then it is vital you let your employer know.

Likewise, if you are in a position of trust or have a responsibility for handling money, it is important to talk to someone at work so you can receive advice about the most appropriate options. This is especially important if you are considering entering into a trust deed.

What jobs don’t allow you to have a trust deed?

In some professions, you may be required to sign a contract that states that you are prohibited from being involved in any form of insolvency whilst in employment. If you do become involved in these situations, it may be considered a disciplinary offense.

The Police, The Fire Service and The Prison Service are all professions which have concerns about Scottish trust deeds and insolvency. This is because when you are struggling with unmanageable debt, you are more susceptible to corruption. Prison guards, for example, may try to take advantage of being in a position of power.

Similarly, jobs that require handling money or confidential information such as those in the financial sector, can put you at risk for blackmail. 

If you are employed in one of the professions listed above, it would be wise to check your employment contract before deciding whether or not to proceed with a Scottish Trust Deed.

You must be employed to to have a trust deed

A trust deed is a way of repaying your debts over a period of time by taking a proportion of your regular income from employment. This means that you must be in employment to be eligible for a Scottish trust deed, as benefit payments are not allowed to be used to repay debt in this way.

You must also be receiving an income that leaves you with a disposable income each month, as your trustee will use this to calculate your monthly payments.

If you are unemployed or have no disposable income, a trust deed is not the right solution for you and you should speak to a debt advisor about alternative options such as a Debt Arrangement Scheme.

Can a trust deed affect my ability to get a new job?

If you are applying for a professional position and you have a Trust Deed, you may be vetted beforehand and may be deemed unsuitable for the role. However, this is usually for roles in the police force, prison service and the fire service or roles where you handle money regularly.

However for other roles, where there is no financial vetting process, there is no reason you need to inform your prospective employer of your Trust Deed. In this case, it shouldn’t affect your ability to get the job.

If you are struggling to manage your debts, a Scottish Trust Deed might be your only option. However, it is important to get professional advice from a professional debt advisor before making any decisions. 

Frequently asked questions relating to Scottish trust deeds

How long do trust deeds in scotland last?

If you are considering a trust deed as a way to deal with your debt problems, it is important to understand how they work. A trust deed is a legal agreement between you and your creditors, which lasts for four years. During this time, you will make one fixed regular payment to your trustee, who will distribute the money to your creditors, minus their fee for arranging and managing the trust deed.

However, in some circumstances, the term of the Trust Deed may be extended for a further 12 months. This would result in the trust deed lasting 5 years.

How much does a trust deed cost?

Applying for a trust deed is free and there are no hidden costs. The only money you will pay is your monthly contribution, which is set at an affordable level based on your income and expenditure. This makes it easy to get the debt relief you need without making any further sacrifices.

Your Trustee will also charge a percentage fee for the work they carry out in managing your trust deed. This fee is agreed with your creditors at the outset of the trust deed and will be paid out of the monthly contributions you make. This fee covers the work of your Trustee in setting up and administering your trust deed, communicating with your creditors and ensuring that your trust deed runs smoothly.