Debt Solutions
Trust Deed - Scotland
If you’re struggling with unmanageable debt in Scotland, a Trust Deed could help. This government-backed solution reduces your monthly repayments to what you can afford and freezes interest, giving you a clear path towards becoming debt free.
What is a Trust Deed?
A 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 4 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 Trust Deed 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%).
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Subject to creditor acceptance. Payment subject to individual circumstances. Credit Rating may be affected. Fees apply, subject to individuals circumstances.
Trust Deed Knowledge Base
How does a Trust Deed work?
A Trust Deed is a step-by-step process that helps you set up an affordable repayment plan with your creditors.
1
Financial Assessment
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.
2
Documents to support your Trust Deed
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!
3
Trust Deed Proposal
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.
4
Trust Deed Creditors Meeting
Once your Trust Deed proposal has been finalised and you’ve signed it, we’ll send it to your creditors for review.
In most cases, there isn’t an actual creditors’ meeting. Instead, creditors are given around 5 weeks to consider your proposal and decide whether to object.
Your Trust Deed can become protected unless enough creditors object. It won’t become protected if either:
More than 50% of your creditors object, based on the number of creditors, or
Creditors representing at least one-third (33.3%) of the total value of your debt object.
If neither of these objection thresholds is met, your Trust Deed can become protected and you’ll move on to the next stage.
5
Trust Deed Approval
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!
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Frequently asked questions about Trust Deeds in Scotland
Why would a creditor refuse a Trust Deed?
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.
How long does a Trust Deed stay on your credit file?
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.
What are the restrictions of a Trust Deed?
– 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
Are Trust Deeds registered?
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.
I have a Trust Deed with another provider, can I transfer it to PennyPlan?
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.
What does a Trust Deed cover?
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.
Is an Trust Deed better than a Debt Management Plan (DMP)?
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.
What happens if my Trust Deed gets rejected?
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.
Can I get another Trust Deed if one fails?
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.
Do most Trust Deeds get accepted?
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.
What is a Trust Deed advisor?
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.
