Debt Free With a Scottish Trust Deed

A trust deed requires you to make a regular affordable payment to your unsecured creditors usually for 48 months, after which they agree to write off any remaining debt.

Trust deeds – things to consider

It is both an affordable way of addressing your debts, as well as a debt strategy that prevents a creditor from petitioning you for sequestration (bankruptcy); as long as you keep to the terms of the trust deed.

Trust Deeds are administered by a licensed Insolvency Practitioner known as a Trustee. The Trustee will negotiate an affordable level of repayment with your creditors on your behalf, and then once creditors have accepted this proposed repayment then interest and other charges are frozen while you make the agreed repayments, usually for 4-5 years.

You must not take out any other credit for the entire term, and you must inform the Trustee if you receive any unexpected windfall. Additionally, if you’re a homeowner, you may be asked to release some equity in your home if possible.

What are the benefits?

Trust deeds can be a viable alternative to sequestration, which is a very serious process, and can cause you to be disqualified from holding positions such as Member of Parliament, Justice of the Peace, governor of a school, member of a Local Authority, or a company director.

Interest and charges on your unsecured debts are frozen from the date it is issued, and it is also designed to allow you to repay an affordable amount for four years, after which (assuming you’ve kept to the terms) your unsecured creditors will write off any remaining debt.

You will also be protected from being petitioned for sequestration for as long as you keep to the terms of the trust deed.

What other considerations are there?

Trust deeds will be registered on your credit history, and as a result you may find it difficult to obtain credit in future.

Additionally you would be required to work closely with the Trustee, and sell any possessions deemed to be of excessive value in order to go towards repaying your debts; for example if you owned a sports car, then it would be deemed appropriate to replace this with a more sensible model.

You may also be required to release a certain amount of equity in your home to go towards repayment of your debts.

Is it the right option for you?

A trust deed might be a suitable debt strategy for you although there may well be more suitable debt solutions available to you, depending on your circumstances. Payplan Limited introduces clients to Payplan (Scotland) Limited, who specialise in providing debt solutions for residents of Scotland.

Payplan Limited introduces customers for Trust Deeds to Payplan (Scotland) Limited, a limited company registered in Scotland (Register No: SC400113). Registered Offices: Payplan (Scotland) Limited, Edinburgh Quay, 133 Fountainbridge, Edinburgh, Scotland, EH3 9BA. Licensed Insolvency Practitioner: NT Payne ACA FCCA MIPA MABRP. Licensed by the Insolvency Practitioners Association (UK). Consumer Credit Licence Number: 0645202.

Trust Deeds - Advantages
  • Can help you to avoid sequestration (bankruptcy) and its damaging effects.
  • Keep to the terms and you should be debt-free in just four years.
  • It should be an affordable plan, and usually after 48 monthly payments, unsecured creditors agree to write off any outstanding balance.
  • Interest and charges are frozen when you enter into the trust deed.
Trust Deeds - Disadvantages
  • It will affect your credit history, although if you’ve missed payments then your credit history will already have been affected.
  • You must work closely with the trustee, who may demand you sell assets of excessive value.