Take a look at the following questions, if you find yourself answering ‘yes’ to all of them, then there is a good chance that a Trust Deed arrangement could be exactly what you’re looking for.

Do you currently have large unsecured debts of £10,000 or more to multiple creditors?
Are you struggling or unable to meet your monthly repayments?
Are you in employment and can afford to make regular monthly payments towards your debts for the next 3 years?
Do you live in Scotland

Here’s a run-down of the pros and cons of a Scottish Trust Deed.

Pros of a Scottish Trust Deed

• It is a legally binding agreement
• At the end of the Trust Deed term (usually 3 years), any unpaid debt is written off
• A Trust Deed will help reduce your repayments into one affordable monthly payment
• All charges and interest will be frozen on your debts
• You’ll have a set date of when you will be debt free
• A Protected Trust Deed will grant you legal protection from any further action from your creditors
• A Trust Deed will avoid you the social stigma and financial consequences of entering into sequestration (bankruptcy)
• Protect your career – no statutory restrictions on employment

Cons of a Scottish Trust Deed

• A Trust Deed requires commitment in the form of regular monthly payments for the full term of the Deed (usually 3 years)
• You won’t be able to apply for any further forms of credit for the duration of the Trust Deed agreement
• If you fail to stick to the terms of the Trust Deed agreement you could be make bankrupt
• The Trust Deed arrangement may require you to:

• Remortgage to release the equity in your property
• Pay extra if you earn a bonus or overtime
• ‘Trade down’ to a cheaper vehicle or sell other valuable assets

• With a Trust Deed you will end up repaying more of the debt you owe than if you went through sequestration
• Your Trust Deed will stay on your credit file for 3 years after its successful conclusion, which may make it more difficult for you to get credit
• The granting of the Trust Deed is advertised to creditors in the Edinburgh Gazette

The Trust Deed agreements means that you will agree to:

• Co-operate fully with the Trustee
• Pay the agreed monthly payment – on time and without fail.
• Not apply for any further means of credit
• Inform the Trustee if you happen to receive any unexpected windfalls in excess of £200.

As part of the Trust Deed arrangement, all interest and charges on your debts will be frozen at the date of signing the Trust Deed.

If you fail to honour the Trust Deed agreement by either defaulting or missing the monthly repayments then the Trust Deed can be terminated. This means that any legal protection had from your creditors will cease and you will once more be faced with handling your debts yourself or finding an alternative professional debt solution.

A Scottish Trust Deed on the other hand can be a better option as it enables you to clear your current debts whilst also avoiding some of the downsides of sequestration.

A Trust Deed is a legally binding agreement between yourself (the debtor), and the people you owe money to (the creditors).

In a Scottish Trust Deed agreement the debtor agrees to repay a percentage of their current debt to the creditors, calculated on how much they can realistically afford to repay each month once essential living costs have been deducted.

In order to enter into a Trust Deed you will first need to discuss the situation with a debt adviser. If the advisor feels that a Trust Deed is the right debt solution for your needs, they will then refer you a licensed Insolvency Practitioner (IP). From there you will work with the Insolvency Practitioner to draw up a proposal which will be sent to your creditors.

If you Trust Deed proposal is not rejected by more than half of your creditors, or by creditors accounting for more than a third of your debts between them, your Trust Deed will be approved – protected by law.

Once your Trust Deed has been approved, you will begin to make regular monthly payments to your Insolvency Practitioner, who will in in turn distribute the agreed amounts to each of your lenders. This process will likely continue for 36 months (three years), after which time any remaining debt will be written off.

A Trust Deed with a protected status simply means that your creditors will be unable to take any further steps or action against you (the debtor) to repay the full amount or force you into Sequestration (bankruptcy).

Being granted with a Protected Trust Deed is often a huge relief to the debtor, as it essentially means that the creditors have to stop pestering you with letters and phone calls aimed at forcing you to repay the money owed. However, it is worth noting that should the majority of creditors who hold more than one third of the debts, refuse to agree to the protected status, then a Protected Trust Deed cannot be granted. As a result, your creditors will be able to pursue you by all legal means.

Applying for a Scottish Trust Deed is a big step so it’s essential that appropriate advice is taken to ensure that it is the best available option.

Many creditors are fairly sympathetic to individuals struggling with debt, and where possible will want to help you with your situation in order to recover as much of their debt as possible.

So long as you are up front and honest with them from the start about your financial situation, in most cases they accept less than what you owe if that is all you can afford and as long as they are satisfied that you will keep to any agreement.

Creditors tend to prefer the option of a Trust Deed over Sequestration (bankruptcy), as Sequestration is costly, time consuming and the end result means that a lot of the money raised from a Sequestration is used to cover professional fees, meaning that the creditors themselves receive less. In most cases creditors much prefer to resolved the situation with a Trust Deed over Sequestration.

A Protected Trust Deed offers the simplicity of a repayment arrangement between yourself and your creditors with legal backing, without the high cost and low returns of a sequestration (bankruptcy).

Your creditors will welcome a Protected Trust Deed where appropriate, as an effective resolution to the situation that you find yourself in.