Most people have never actually heard of a Scottish Trust Deed before. When people hear the phrase ‘Trust Deed’ they usually associate it with the property industry, which it is, but not in the sense of a debt solution. A Scottish Trust Deed is actually a government approved scheme to help Scottish residents get out of debt. Scotland has seen a surge in people suffering with debt problems, as well as England and the rest of the world, mainly due to the recession which was brought on by the banks. High flying bankers are sat at the top laughing while the government drives in more money for yet another bailout and it’s the people at the bottom, the taxpayer, who have to pick up the bill. Unfortunately we will never get rid of debt, it will be with us for decades and the likelihood is our grandchildren will have to pick up some of the bill. Anyway, I’m steering from the topic now…
So, tell me, what is a Scottish Trust Deed exactly? A Scottish Trust Deed is basically a formal arrangement between you and your creditors to repay what you can afford towards your debts over a set period of 36 months. You pay one lower, set amount for this period and then any remaining debt left at the end is legally written off by your creditors. If you were to take out a similar arrangement in England you would find it would come under an IVA (Individual Voluntary Arrangement) but a Trust Deed has more favourable criteria.
200 per month is not the set amount for an IVA There is a lot of misleading information in circulation regarding IVAs. Most people assume you pay 200 per month and then in 60 months you are debt free, but to be honest it all depends on your circumstances. The main factor is that you must be able to repay at least 25% of the total debt over the 60 month period, so if this works out at 200 for you, great! But it doesn’t for everyone.
The minimum period for a Trust Deed is 36 months (3 years), 2 years less than an IVA and you must owe no less than 10,000 a difference of 5,000 in comparison. On top of this you must be able to repay only 10% of the debt and afford 150 per month, a staggering difference. So if you are a Scottish resident who owes over 10,000, can afford 150 per month and is struggling with your debts your in luck, there is a solution!
The Trust Deed solution does suite everyone… Trust Deeds do not suite everyone, it all depends on your circumstances whether or not it is right for you. They are designed for people who genuinely finding it a struggle to make their repayments each month and cannot find any other solution, i.e. borrowing from friends and family. They would be ideally suited to someone who has recently lost their job and are struggling to get back into employment, had taken a salary cut or someone who has just bitten off more than they can chew with credit cards and loans. Trust Deeds can be extremely beneficial to homeowners facing bankruptcy as they can prevent your house being repossessed by the banks.
Another important bonus of a Trust Deed is the interest and charges are frozen, meaning the debt will not accumulate like it probably is now where the majority of your monthly repayment is going in the banks pocket and only a small percentage of your debts are actually being paid off each month.
There are downsides though. Your credit rating will be affected during the 3 year period whilst you are in the Trust Deed program and wont recover until long after, but if you are in a serious position with your finances the likely hood of you wanting to obtain further credit after the period is slim as most people would want to steer clear of debt for good! So, on that basis you will probably not require the use of your credit rating. Your reputation will also be damaged, although this is not important to everyone. I think relieving the stress of being in debt actually outweighs this by miles!
For more benefits on Protected Trust Deeds and how it can help you get on the road to financial freedom. For more advice on Trust Deeds visit our website
