TRUST DEEDS FAQ's
What is a Trust Deed?
How long does a Trust Deed last?
How do I get started?
What is the process?
What are the advantages of a Trust Deed?
What are the disadvantages of a Trust Deed?
What am I committing myself to if I sign a Trust Deed?
How long does it take to set up a Trust Deed?
I am a homeowner, how will a Trust Deed effect me?
What happens at the end of the Trust Deed?
What is a Trust Deed?
A Trust Deed is a legally binding agreement between the debtor and creditors. An affordable payment will be calculated based on individual circumstances and is paid over a period of 3 years. At the end of this time a large percentage of debt will be written off. A Trust Deed is legally binding and forms part of the Bankruptcy (Scotland) Act 1985.
How long does a Trust Deed last?
A trust deed will last for 3 years but in certain circumstances can be extended by the trustee.
How do I get started?
To enter into a Trust Deed you must either live in Scotland or Scotland must have been your main country of residence at any time prior to the date of the Trust Deed being signed. Only secured debts can be included in a Trust Deed and there is no minimum amount of debt required to qualify.
What is the process?
You must provide the Trustee appointed to your case details of all your creditors, how much you can afford to pay into an arrangement each month and any other financial information that might me relevant.
The Trustee will put together a form of proposals to the lenders for approval and administer the Trust Deed.
If all conditions are met, the Trust Deed will then registered as protected. This will prevent lenders from taking legal action against you and ensures that interest and charges will be frozen on your debts.
What are the advantages of a Trust Deed?
The stress of being in debt is reduced, a percentage of your debts will be written off, creditor hassle is stopped and you are protected from bankruptcy/ sequestration.
What are the disadvantages of a Trust Deed?
Your credit rating will be affected, existing arrestment or diligences are still effective, you cannot be a director of a limited company and if you can not keep up repayments then your assets may be at risk.
What am I committing myself to if I sign a Trust Deed?
You are entering into a contract to repay your debts, usually at a reduced rate therefore you must be willing to Co-operate with the Trustee, pay the agreed monthly repayment, take out no further credit and you must advise the Trustee of any changes in circumstances i.e.. pay rise, windfall etc..
How long does it take to set up a Trust Deed?
It generally takes 6 weeks to set up a Trust Deed.
I am a homeowner, how will a Trust Deed effect me?
In this case you will have to release equity in your home into the Trust Deed, this is usually part of the final settlement. However, there are mechanisms that can be set in place to protect your home i.e. buy back option or extra contributions.
What happens at the end of the Trust Deed?
At the end of the agreed time period any remaining debts will be written off and you will become debt free.
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