Trust Deed - Scotland only

With a Trust Deed, you could have:

What solutions are available?
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Unaffordable unsecured debts written off

At the successful end of your agreement, any outstanding unsecured debt included in your Trust Deed will be written off. Any remaining unsecured debt not included in your Trust Deed will remain outstanding, as will any secured debts you may have.

Affordable payments that fit around your bills

During your Trust Deed, your bills and other important living costs will be treated as priority. You'll only pay towards your unsecured debts what you can afford once those costs have been covered. But your lenders will expect you to pay in as much as you realistically can, so they might want you to cut back on your non-essential spending.

No more demands from lenders

Because a Trust Deed is legally binding, your lenders can't take any further action against you once the proposed terms have been accepted by at least half of them - as long as they represent at least one third of the debt in question. None of your lenders are guaranteed to accept the terms. Plus if you don't keep to the terms of your Trust Deed agreement, you could put yourself at risk of Sequestration.

How a Trust Deed works

A Trust Deed is designed to help people with unaffordable debts of at least £5,000. It works by reducing the amount you pay towards your unsecured debts each month to an affordable level.

After an agreed time - usually four years - the unsecured debts you can't afford to repay will be written off.

During your Trust Deed, you'll be legally protected against further action by the lenders involved, as long as you keep up with your payments.

Homeowners may have to release equity from their home as part of the arrangement.

If you aren't able to release equity (perhaps because of your Trust Deed's impact on your credit rating), you may have to make additional repayments instead (but only up to the value of your equity).

Is it right for me?

A Trust Deed could offer a way out if you don't think you'll ever be able to repay your unsecured debts in full within a reasonable timeframe.

Some people automatically think of Sequestration when it comes to dealing with unmanageable debts, but a Trust Deed is another option that could help you.

However, you'll only qualify for a Trust Deed if you really can't afford to repay what you owe. You must also commit to regular monthly payments until the agreement has come to an end. Your details will appear in the publicly available Register of Insolvencies. Finally, you must be a Scottish resident to qualify.

Final points

A Trust Deed could help you if you're really struggling, but do remember that it will affect your credit rating in the medium to long term, which means you may find it difficult to get a mortgage and/or any other credit - and if you do so, you may have to pay a higher rate of interest.

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Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of a Trust Deed, alternative solutions may be offered. If your Trust Deed fails, it could lead to Sequestation. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release the equity in their property.
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