Trust Deeds are voluntary agreements between you and your creditors (the people you owe money to). You agreed to repay part of what you owe them. A trust deed will normally include a contribution out of your income for a specified period; this is usually 3 years but can vary. Your Trust Deed must be proposed and supervised by a qualified insolvency practitioner. An ordinary trust deed is not binding on creditors unless they agree to its terms.
Each case is individually assessed, much in the same way as with an IVA in England or Wales. As such, you may qualify with £7,000 or more debt from 2 or more creditors. Although, you may find that an alternative debt solution better fits your circumstances, if you are unsure, please call today for confidential, helpful advice on 0800 037 0053.
What are Protected Trust Deeds?
Protected Trust Deeds are legally binding on your creditors subject to you complying with the terms under which it was agreed. Under a Protected Trust Deed, your creditors cannot take any action against you, including filling for bankruptcy.
How does a Trust Deed work?
Step 1 – your first call to us
When you call in on 0800 037 0053, we will initially assess you for a Debt Management Plan. This involves discussing your income and expenditure and calculating what is known as your disposable income or DI. As there is no guarantee that your creditors will accept a Trust Deed and also because it will take a few weeks to get your Trust Deed together, we believe that it is sensible to put a Debt Management Plan in place as a short-term solution and a fall back.
Step 2 – your Trust Deed proposal
From your first call, we will be able to assess if you meet basic criteria for a Trust Deed. If you do, you will be passed over to the assessment team who will conduct a more thorough assessment based on the information you have already given to us.
If following the more in-depth assessment, we believe that you are a candidate for a Trust Deed. We will send out the relevant paperwork and begin progressing you application. We will keep in close contact with you throughout the process.
Step 3 – your Trust Deed has been approved
For your Trust Deed to become protected, you will need a sufficient proportion of creditors to agree to it. At least 50% of your creditors must agree and must be owed at least one third of your total debt. Creditors who do not reply to your trustee within 5 weeks are deemed to have agreed.
What are the benefits of a Trust Deed?
A Trust Deed will:
- Consolidate all your unsecured debt into one monthly payment
- Have a fixed term, usually 3 years
- Write off all your remaining unsecured debt at the end of the term
- Stop creditors from calling and sending letters to you
- Prevent you from being made bankrupt / sequestration
- Allow you to continue to run any Ltd company that you may be running
- Reduce your monthly outgoings in line with your income and expenditure
Are there any drawbacks to a Trust Deed?
All debt solutions have drawbacks, in the case of a Trust Deed, these may be;
- Your trust deed will be advertised in the Edinburgh Gazette
- You must convey all your assets to your trustee who will release any money tied up in those assets
- You will normally be expected to raise money from the equity in any property that you own
- A trust deed won’t prevent repossession if you fall behind on your mortgage