Do I qualify?
Here is an example of how a Scottish Trust Deed could make your debts affordable:
Let say your unsecured debts
looked like this...
Total Owed £28,000
After a Scottish Trust Deed...
New monthly repayment is based on affordability and varies from plan to plan.
Visit our FAQ Section for any in depth information on Scottish Trust Deeds
No debt management solutions should be embarked upon without asking questions and weighing up the pros and cons of it to see if it is really the right solution for your circumstances. For example, are you likely to be able to pay off all of your debt in just a few short years on what you earn or does it look like you’ll be paying for a significant chunk of your life? Does you salary allow you to make the kind of payment required by a Scottish Trust Deed or if you have less than required would the debt arrangement scheme (DAS) be a better idea.
The following is a list of pros and cons of Scottish Trust Deeds which should be considered in light of your current circumstances.
Scottish Trust Deeds are designed so that you can have a good standard of living and pay your creditors back from any surplus income that is left over after your bills have been paid. Never again will you have to frantically reduce your food budget in order to meet your debt payments.
Whatever unsecured debt remains after you have handed over your assets and completed your 48 monthly payments will be written off with your creditors. Your Trustee will ensure that the paperwork is taken care of so your creditors know they cannot pursue you for any outstanding amount.
Once a Scottish Trust Deed is protected, your creditors cannot come after you for payment. If any of them do contact you, all you need to do is either contact your Trustee and tell them who it was or tell your creditor they are not allowed to contact you any more and to speak to your Trustee.
Sequestration can have a devastating long-term effect on your finances not to mention your emotions because of the social stigma attached to it. Scottish Trust Deeds do not arouse the same feelings as sequestration and often can be simply explained away as a formal debt payment plan.
Scottish Trust Deeds are only available to residents of Scotland, who benefit from lower qualification criteria than other similar debt management products available in England and Wales and do not have to spend as long making payments.
Some jobs contracts have specific clauses in them that prevent you from declaring sequestration. These are usually relating to positions of responsibility in society, such those found in the fields of accountancy, the fire brigade, the prison system among others. In these cases, Scottish Trust Deeds can be invaluable in helping you retain your career and pay back your creditors without resorting to sequestration.
At the beginning of the Scottish Trust Deed process you will have made a budget with the guidance of your Trustee, and once the agreement has been signed and your payments start you will begin to live by that budget. You may never have had to something like this before, so you will be learning new money management skills as you go along which will stand you in good stead for your future debt-free life.
From the time your Scottish Trust Deed is protected, and as long as you keep up the repayments all the charges and interest will cease preventing the debt from increasing any further. Much of the cause of spiralling debt is the cumulative effect of having large charges and interest added repeatedly, which keeps individuals in a vicious cycle. This all stops once your creditors agree to your Scottish Trust Deed.
There is no guarantee your Scottish Trust Deed will achieve protected status. If those creditors that make up two thirds of the value of your debt do not agree to the terms proposed by your Trustee, they could move to sequester you. However, they may only do this is it looks likely they will gain much more by this move than they would get from the Scottish Trust Deed.
It is unlikely you will be able to retain assets that are worth over a certain amount of money. Many Trustees have their own rules for what they consider a valuable asset, although as a general rule your car will be exempt as long as it is not worth more than £1000 or if you are self-employed and have a works vehicle. You will almost certainly have to release equity in your home if you have it.
Unlike sequestration, which takes only a few months to complete, a Scottish Trust Deed takes 3-4 years to complete – 48 months of payments and then up to a further 12 months to tie up all the loose ends and obtain a discharge.
If you have unsecured and/or secured debt of less than £10,000 you will not be eligible to apply for a Scottish Trust Deed. In these cases, something like the Debt Arrangement Scheme might be more appropriate. Secured debts are not eligible to be included in most debt management schemes.
A Scottish Trust Deed will negatively affect your credit rating and unfortunately there is no way around this. However, by the time you come to consider a Scottish Trust Deed as a solution to your debt problem chances are you will already have defaulted on some payments and affected it anyway.
All Scottish Trust Deeds must be recorded by law on a personal insolvency register. However, this register is generally only seen by financial professionals and lenders, and it is highly unlikely that any of your friend, family or work colleagues will ever see you name on there.
For more information about Scottish Trust Deeds and what is involved, call and speak to one of our advisers in confidence on 0141 945 2904.