Trust Deed - Scotland
At PennyPlan we can provide debt relief for Scottish residents through a debt solution called a Trust Deed.
In fact, 5,123 people in the last 12 months alone chose an Trust Deed as the best debt solution for their circumstances.
Do I Qualify
For a Trust Deed?
What is a Trust Deed?
An Trust Deed is a debt solution in Scotland for Scottish residents to consolidate their debt.
It is a legally binding agreement between you and your creditors to pay back what you can afford of your debt over a set period of time, usually 5 years.
Your repayments will be based on what you can realistically afford to pay each month, taking into account your income, expenditure and any dependants you may have.
After your IVA is approved, all interest and charges are frozen.
Once you have completed your Trust Deed, the remaining debt is written off.
This means that if you have £20,000 of debt and can only afford to repay £200 per month, at the end of your 4 year Trust Deed term, £10,400 could be written off (52%).
Example of a Trust Deed
UNSECURED DEBTS
Your monthly repayments:
Find out for FREE what debt help is available to you
Subject to creditor acceptance. Payment subject to individual circumstances.
Credit Rating may be affected. Fees apply, subject to individuals circumstances.
How does a Trust Deed work?
The Trust Deed process has a few stages before you be approved for this debt solution.
The first step in gaining debt advice is to find out if you qualify by taking our quick and free online assessment.
This gives both you and our advisors a brief understanding of your eligibility.
Once you have taken our brief assessment online, the next stage is to speak to one of our friendly advisors who will conduct a more in-depth financial assessment with you.
The assessment will include personal or financial information to help understand the best way to assist you. The assessment will also ensure that your household bills are taken into account, ensuring your repayment plan leaves enough money to stay up to date with such items.
The financial assessment also makes sure you have had the appropriate debt advice, making you aware of all solutions available to tackle your debt problems. It also gives you an idea of what your monthly payments could be.
If both you and the advisor agree that an Trust Deed is the right solution for you, then the next stage will be to gather documentation to show creditors you do need the financial support an Trust Deed brings.
It will also prove to creditors you can make the repayments proposed in the arrangement. After all, this plan is designed to help you get your finances back on track so you can become debt free.
Documentation needed to support the Trust Deed application vary based on your own circumstances.
However, some documents are usually standard across all Trust Deeds in Scotland.
Now you are probably thinking, it is going to be an effort to gather everything I need!
Do not worry, our market-leading technology help make the process as easy as possible for you. With a few clicks of a button, you could have all the documentation you need sent directly to your account with us.
The documentation needed for most Trust Deeds include:
- Proof of income
- Bank statements (Proof of expenditure)
- Identification
- Evidence of debts included within the Trust Deed
Our software can help you send these items to us with a few clicks, so do not feel overwhelmed!
Once we have all the documentation, it is time to start putting together your Trust Deed proposal to send to your creditors.
This is the contract we send to the people you owe money to, which will form the basis of your Trust Deed.
It will include items such as your monthly payments, length of the Trust Deed and any other conditions that have been agreed upon.
Once your Trust Deed proposal is finalised and you have signed it, it is now time for us to send it to your creditors for their approval.
More often than not, there is not an actual Trust Deed creditors meeting, and it is used more as a deadline for creditors to get their votes in.
For your Trust Deed proposal to be approved we will need to ensure 75% of voting creditors agree to the terms.
Congratulations! You have now entered an Trust Deed and have a clear, sustainable plan toward debt freedom.
Your chosen company will now act as an Trust Deed supervisor for your arrangement. They will now manage your Trust Deed on your behalf for the duration of its term.
You will make your first monthly payment once your Trust Deed is approved. We then contact all your creditors on your behalf to inform them you have started your Trust Deed.
As long as you maintain the terms of your Trust Deed agreement, you have a clear timeframe of when your debt will be repaid and the remainder written off.
Once you have made your final payment, the remaining debt is wiped and you are debt free!
What debts can be included in an IVA?
Most debts that are not secured to an asset can be included in an IVA.
This includes:
- Credit Cards
- Personal Loans
- Catalogues
- Payday Loans
- Overdrafts
- Council Tax Arrears
- HMRC debts (including income tax)
- Previous rent arrears (not current address)
- Mortgage Shortfalls (if no longer in possession of the home
Debts that cannot be included:
- Child Maintenance
- Student Loans
- Secured Debts (i.e your mortgage)
- Car Finance (if you still have the car)
- Current mortgage or rent arrears
If you are unsure if a debt can be included in your IVA, our advisors will be more than happy to help.
How does a Turst Deed affect your life?
So an Trust Deed sounds good so far, but now you’re wondering how it affects your everyday life right?
Like with any financial decision, there are important factors you must consider and weigh up how they will affect your current lifestyle.
Your job should not be affected by your Trust Deed. You will still be able to work and earn an income as normal. If you are still concerned about how the Trust Deed will affect your employment, then it could be a good idea to review your employment contract.
If you are self-employed, then your Trust Deed should not have any effect on your business. You will be able to keep trading and make money as normal.
There are some exceptions to the rule however such as if you work in a bank handling large amounts of cash, or are a Chartered Accountant. In these cases, it is best to get advice from one of our advisors first.
When you own a home, it is something that is considered within an Trust Deed. However, this doesn’t mean you will lose your home as a result of your Trust Deed.
You will never be required to sell your home during Trust Deeds.
If you have equity in your home, then towards the end of the Trust Deed the creditors would expect you to attempt to release equity by way of remortgage or secured loan to pay towards the Trust Deed. The reason being is that this helps creditors reduce the amount of debt they are expected to write off.
However, this is not always possible for several reasons such as age, affordability and a less desired credit rating. If this is the case and the attempt is unsuccessful, the Trust Deed still moves forward without the release of equity.
It is possible to obtain a mortgage whilst on an Trust Deed. However, it must be noted that it does reduce your chances of acquiring one.
Remortgages are also possible, but the rates could be less favourable and you may have to seek the services of a specialist mortgage lender.
You may wish to seek independent advice from a mortgage advisor beforehand for extra information.
Yes, it is possible to obtain car finance with an IVA. You would need to seek approval from your insolvency practitioner, as you would be accessing new credit agreements.
Your panel of lenders willing to offer you finance would be less, and your interest rates could be less favourable. It is, however, possible to renew or obtain car finance agreements.
Absolutely, you can still maintain a bank account whilst on a Trust Deed. However, you will not be able to keep credit services such as an overdraft or credit card.
It is recommended that you change your bank accounts to a provider to who you owe no money to. This is because your bank has a ‘right to offset’ clause, meaning they can take it from your account to repay the debt without warning.
If you owe no money to your current banking provider, you may not need to move. However, if your current bank is one of your creditors then it is extremely recommended that you switch providers.
This includes if you owe money to any banks within their group. For example, Halifax and Lloyds are part of the same banking umbrella. Therefore they would be classed as the same entity.
Do not worry about all the various banks and groups, our advisors will be able to provide you with the necessary advice to make sure your funds are safe.
Positives and Negatives of a Trust Deed
As with most repayment plans that consolidate debts, there are pros and cons of a Trust Deed solution in Scotland.
Advantages of an Trust Deed
- One monthly repayment that covers all your unsecured debts
- A clear timeline of when you are debt free
- All interest and charges are frozen
- Upon completion of the Trust Deed, any debt remaining is written off
- Creditors will not be able to contact you
- Creditors cannot take further action against you whilst in a Trust Deed
Disadvantages of a Trust Deed
- You will be restricted from obtaining further credit during the Trust Deed
- A trust Deed will appear with credit reference agencies for six years
- If you do not keep up with the repayments, the arrangement could fail
- Your creditors have the right to reject your Trust Deed proposal
- If you are a homeowner you could be asked to remortgage in your final year of the Trust Deed
- If you come into a lump sum during the Trust Deed, you could be asked to contribute some of the proceeds to the arrangement
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During your Trust Deed
Once your Trust Deed has been approved, your insolvency practitioner (IP) will manage the arrangement on your behalf. Your IP will contact your creditors to notify them of the Trust Deed and request that they cease any direct contact or correspondence with you. The IP will also deal with any future correspondence. The insolvency practitioners will be your direct contact for any queries or changes that you may have during your Trust Deed.
Your IP must be aware of any changes to your financial circumstances during your Trust Deed. This ensures that your arrangement is reviewed to make sure your Trust Deed ends with a successful completion.
Your responsibilities on a Trust Deed
Whilst on an Trust Deed it is extremely important that you adhere to what you agreed within the arrangement:
Make your monthly payments on time – It is important to keep up to date with your new lower repayments. Failing to make payments could lead to your insolvency practitioner failing your Trust Deed.
Notify your IP of any changes in circumstance – If you experience any significant changes, such as a change in job which alters your monthly income, you must inform your insolvency practitioner as soon as possible.
Is a Trust Deed a good idea?
An Trust Deed can be a great solution for debtors who can only afford to pay back a certain percentage of what they owe in the medium term.
It can also be a good idea for debtors who are struggling to keep up with multiple monthly repayments, as an Trust Deed consolidates all debts into one manageable monthly payment.
However, the disadvantages of an Trust Deed must be seriously considered and how they will affect your financial situation in the coming five years.
A lot of clients will feel the advantages outweigh the disadvantages, as it provides a clear roadmap to debt freedom whilst remaining affordable.
Is a Trust Deed right for me?
If you have a debt problem and are unsure whether a Trust Deed is the right solution for your financial circumstances, then we highly recommend you speak to one of our financial advisors before applying for an Trust Deed.
As a trusted Trust Deed provider, we understand how vulnerable and confusing this time can be. The PennyPlan team want to provide you with free advice that helps you make a more informed decision in finding a suitable solution.
We will discuss all your options with you, as well as any pros and cons associated with each solution. You should avoid any Trust Deed company that does not discuss all your options, as understanding all debt solutions will ensure that you make the best decision for your circumstances.
Frequently asked questions about
Trust Deeds in Scotland
If your creditors believe that they would get a better return in sequestration, then they may refuse your Trust Deed proposal.
However, our insolvency practitioner will negotiate with your creditors to try and reach an agreement that is acceptable to all parties.
A Trust Deed will stay on your credit file for six years.
Once the Trust Deed has been completed, you will be able to start rebuilding your credit score by making all future repayments on time and in full.
– Unable to obtain credit for the duration of the Trust Deed
– A marker on your credit file for six years
– Your name will be published on an AIB Register
Each Trust Deed is registered with the insolvency service.
Your Insolvency Practitioner will provide you with a case reference number, which can be used to locate your Trust Deed on the AIB register. This can be beneficial if you need to provide evidence of your Trust Deed to creditors or financial institutions.
Unfortunately, you will not be able to transfer your current Trust Deed to PennyPlan.
You will need to contact your current insolvency practitioner to discuss your options on how to ensure your arrangement comes to a successful conclusion.
A Trust Deed covers all your unsecured debts, which includes any money you owe on items such as credit cards, personal loans or overdrafts.
It does not cover any secured debts, such as your mortgage or car loan.
Every persons financial circumstances are unique.
Compare Trust Deeds and a Debt Management plan with our in-depth comparison article. This will help you make a more informed decision to which debt solution is best for you.
At PennyPlan we provide plans to cater to the financial circumstances of every household.
Don’t worry if your Trust Deed is rejected, we will provide debt advice on other solutions such as debt management plans, or even possibly re-proposing your Trust Deed to creditors with improved terms.
If a Trust Deed fails for whatever reason, it is possible to enter a second arrangement.
However, there must be clear evidence as to why you feel that the new Trust Deed will be more successful than the previous.
There could have been numerous reasons as to why your Trust Deed failed such as loss of job resulting in no income or a relationship split between a couple entered into a joint Trust Deed.
Whatever the reason, we would need to explain why the Trust Deed will have a better desired outcome not just for you, but for creditors also.
We cannot speak for every insolvency practitioner, however over 95% of our proposed Trust Deeds are accepted by creditors.
This is because our team have many years of experience in liaising with creditors, understanding their voting habits and what they wish to achieve from Trust Deeds.
Our debt advice team also have a very successful track record in negotiating on behalf of our clients to ensure that the terms of the Trust Deed are acceptable to all parties.
An Trust Deed advisor is the member of our team who will assist you in understanding the options available to you in resolving your debts.
They will help you assess your financial situation, and the documents required to proceed with the option you feel is best for your circumstances.
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Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions
100% FREE ADVICE
Get information today on your available options
Take the first steps to becoming Debt Free!
- One lower monthly payment
- Write off 75%* of unaffordable debt
- Freeze interest & charges
- Stop legal action including bailiffs
- Receive FREE well-being sessions
