Trust Deed
How does a Trust Deed work?
A Trust Deed is a legally binding and formal voluntary agreement, used in Scotland only, which allows your Trustee to take over responsibility for dealing with all of your creditors.
Any payments that you have been making to your creditors will stop. Instead, you pay your trustee whatever surplus income you have left after meeting all of your day to day living expenses.
After the Trust Deed is signed, the Trustee will write to all your creditors. Unless creditors, who are owed more than one third of the total debt object, the Trust Deed will become automatically protected, which will prevent your creditors from taking any further action against you. Generally, if the creditors are offered £0.10 in the pound they will accept the Trust Deed.
Once you have been accepted on a Trust Deed, any correspondence from your creditors should be passed to your Trustee to deal with. Whilst your Trustee will deal with all your creditors, you will still need to continue to pay your mortgage and any other ongoing living expenses.
How will a Trust Deed benefit me?
- You no longer have to deal with your creditors - Your Trustee does that for you.
- If you are in financial difficulty, you can sign a Trust Deed immediately.
- Once the Trust Deed has become protected your creditors cannot arrest your earnings or take further action against you.
- There is no need for your employers to know that you have signed a Trust Deed, unless they are creditors of yours.
- A Trust Deed will normally only last three years and after that the remaining debts are effectively written off.
- Your credit rating is not automatically affected by signing a Trust Deed.
- There are no court proceedings involved.
How much does a Trust Deed cost?
There are no initial costs in setting up a Trust Deed. If you start your Trust Deed, you Trustee's fees and other expenses will be paid from contributions from your income. If you have insufficient income or assets it is unlikely that a Trust Deed will be possible. Call us today for free help and advice on 0800 530 0085 and we'll be happy to discuss any questions you may have.
What about my furniture and car?
You are allowed to retain all basic household items. You can keep your TV, computer, etc. You can keep your car as long as it is not of a very high specification and value and if you need it for work or family purposes. If it is of high specification and value then you will be made to downsize.
Will my home have to be sold?
It is extremely unlikely that your home will be sold, unless you agree to it. If you have enough equity in your house, it is usually possible to agree some other way of releasing this balance without having to sell it.
How long will it last?
A Trust Deed lasts three years.
Can I have a bank account?
Yes, although the bank account should be a basic account which offers you no credit or lending facilities.
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Triangle Financial Services LLP,