All you need to know . . .
What is a Trust Deed?
If you live in Scotland and find yourself in financial difficulty struggling to meet repayments stipulated by your credit agreement, a trust deed may offer a viable alternative to help you become debt free. However, this is a decision that should not be taken lightly, and it is one that requires all the right information in order for you to ensure that it is the right path for you to take in regards to your debt.
A legally binding solution to managing your money and paying off multiple debts. It is a formal repayment arrangement between you and your creditors.
In the majority of circumstances, trust deeds will include a contribution from your current income for a period of time that is predetermined by the creditor and the registered trustee. Once the trustee sends off the application, the terms must be approved by the creditor in order for the process to move forward.
A Trustee, by law, must be a qualified insolvency practitioner. An insolvency practitioner will be regulated by the Scottish legal system and as a stipulation they must be registered to a pre-approved governing body in order to ensure that the trust deed itself is upheld to the correct standards throughout.
If you’re wondering if a Trust Deed is the right solution for you, speak to a debt management specialist at Refresh Debt Services for FREE advice on 0800 121 48 63 or complete the online form on this page.
What are the benefits of a Trust Deed?
The protected trust deed has all the basic terms that you would expect from a traditional trust deed, but you will be protected from any further involvement of your creditors as they try to take continual action on your income and assets.
If the terms of your trust deed are met by both parties, money cannot be forcibly taken from your accounts or investments, nor can you be made bankrupt without final legislation from both your trustee and the Scottish legal system. There are ways that creditors attempt to get around this – if mortgage repayments have been missed, creditors can move to repossess homes in order to receive their owed fee.
It’s important to get the right support and guidance surrounding these issues – without knowing your rights, there is very little you will be able to provide by way of defence should your creditors begin to act around the terms of the pre-existing trust deed.
Furthermore, you will also be prevented from applying for your own bankruptcy or insolvency, or indeed for another debt payment programme as organised by the Debt Arrangement Scheme (DAS).
What are the drawbacks of a Trust Deed?
Signing a trust deed is a financial decision that needs to be taken with careful consideration as the effects will be in place for a number of years during the agreement.
Once the deed is signed, you should receive a copy of the Debt Advice and Information Package, distributed by the government. This will include material that has been approved by the local authority and is designed to provide context to your situation as well as further options for support.
You should also be aware that a successful application for a trust deed will – like bankruptcy, have a serious effect on your credit rating. This may in some instances prevent you from receiving credit such as some phone contracts, broadband subscriptions and other forms of loans until you have successfully improved your credit rating back up to a suitable level. In some cases, trust deeds also prevent you from being able to work in certain trades, it’s a good idea to explore how these restrictions may affect you depending on your chosen career.
If you would like to discuss the advantages and disadvantages of a Trust Deed with a Refresh debt advisor, call 0800 121 48 63 or use the online contact form on this page.
How to apply for a Trust Deed
If you have decided that a Trust Deed is the right option for you, we will put you in contact with a professional trustee and insolvency practitioner.
Your trustee has 3 roles to help you set up and complete your Trust Deed. The first role is as an Advisor, confirming that you understand and are happy with the terms of the agreement. At this point you will provide information about your assets, debts, income and creditors in order to calculate an affordable sum which you can repay each month. The proposed and agreed budget will ensure that your repayment plans are realistic, and that all of your eligible debts are covered by the Trust Deed.
The second role your trustee carries out is as your Nominee; once your proposed budget is approved, they will pass the terms of the Trust Deed onto your debt holders. The courts will be informed that your Trust Deed has been approved, and the necessary paperwork will have been filed enabling you to start making your repayments.
The final role your Trustee carries out is as a Supervisor; watching over your finances and repayments for the entire duration of the Trust Deed. If you miss any payments, they will be there to follow up on your financial position.
Apply now by calling 0800 121 48 63 or use the online contact form on the right.
How much will I have to pay for a Trust Deed?
The trustee will charge you a fee for the work they do to ensure the agreement is upheld by all parties involved.
After this agreement has been made, the money that is entitled to the trust deed provider will be taken from the money they collect, meaning separate payments are unnecessary. They will be able to assess the contract and ensure all practices are being upheld correctly.
In terms of actual payment, you can expect your trustee to charge you anywhere between £2,500 and £5,000, this figure is largely determined by the complexity of your case. You can expect this figure to rise if you have a considerably large number of creditors and numerous contractual credit agreements that may overlap, making repayments more complex than a standard case.
The costs will also be determined not only by the work that is done setting up and administrating the deed itself, but by the added expenditure and outlays that are incurred along the way.
Who is eligible for a Trust Deed?
If you want to apply for a Trust Deed, there are certain conditions which must be met in order to be considered eligible. Since a Trust Deed is a legally binding agreement between several parties, all of these conditions must be met, or your application will be rejected.
The minimum amount of debt you must have in order to apply for a trust deed is £6,000. A Trust Deed transfers your rights regarding your assets to a registered trustee who in turn negotiates the repayment process with your creditors on your behalf.
You need to be able to make regular monthly payments at a reasonable amount, you must be in employment and be able to offer at least £100 per month in repayments, this will depend on your current financial situation.
If you fall into these categories, a Trust Deed may be the right debt repayment solution for you. To find out more about setting up a Trust Deed, call us on 0800 121 48 63 or fill in the online form on this page.
What type of debt can be covered by a Trust Deed?
Trust Deeds are designed to handle multiple debts at the same time, if you’re struggling with two or more of the following ‘non-priority debts’ listed below, a Trust Deed could make repaying all of your debts more affordable.
• Personal loans
• Pay day loans
• Credit cards
• Store cards
• Overdraft, including fees and charges
There are also ‘priority debts’ which can be placed within a Trust Deed, these priority debts include any council tax arrears you owe, repossessed asset debts and utility debts such as gas, electricity or water arrears.
There are debts which can’t be included in a Trust Deed, such as court orders permitting to child support, child maintenance, court fines or student loans. If you are having trouble making payments to any of these, they must be dealt with separately.
Is my home at risk if I enter into a Trust Deed?
This will depend on a number of different factors, including the property value, who owns the property, and the amount owed on the property. If you’re a home owner, we recommend speaking to one of our advisors to see how this may affect the terms and conditions of any Trust Deed arrangement.
Need more advice?
If after reading this you think that a Trust Deed may be the right sort of debt repayment plan for you, contact Refresh Debt Services to discuss the advantages and disadvantages of using a Trust Deed to become debt free.
Call now on 0800 121 48 63 or use the contact form on this page.