If you live in Scotland and you have unsecured debts you're struggling to repay, there are some solutions available exclusively to Scottish residents that could help you to get out of debt at an affordable rate.
A Trust Deed is one insolvency solution designed specifically for Scottish residents, which could help people to repay their debts at a realistic rate. Debt Advisory Centre Scotland offers more information about Trust Deeds, but here we'll just take a basic look at what they are and how they work.
What are Trust Deeds?
A Trust Deed is a legally binding agreement that could be reached between you and your unsecured lenders. It's specifically designed to help people with a significant amount of unsecured debt they can't afford to repay - but which they could commit to making reduced, regular payments towards.
How do Trust Deeds work?
A Protected Trust Deed could help you to regain control of your debts with affordable payments over an agreed amount of time.
Basically, you'll agree to make single monthly payments towards your unsecured debts, based on what you can afford (after all your essential living costs have been covered) over an agreed period - in most cases, three years.
You'll be protected from any further action from your lenders, and, on successful completion of the Trust Deed, any remaining unsecured debt included in the agreement will be written off. As long as you keep up with your repayments and stick to the terms of the agreement, your Trust Deed cannot fail.
How could I apply for a Trust Deed?
As a legally binding insolvency solution, a Trust Deed can only be set up by a qualified Insolvency Practitioner (IP), who has the qualifications and experience to represent people in formal insolvency cases.
Your IP will help you to draw up a Trust Deed proposal, based on how much you can afford to repay towards your debts every month. This proposal will then be sent to your lenders, and unless more than half of them - or those who 'own' more than a third of the total debt value - object, your Trust Deed will become a Protected Trust Deed, and you'll begin making your agreed payments.
Are there any drawbacks to Trust Deeds?
The details of your Trust Deed will be published in the Edinburgh Gazette, which could be off-putting if you'd prefer to keep your finances private.
Your Trust Deed will stay on your credit record for six years, which makes it likely that you'll have trouble getting any further credit during this time.
You also may have to release some of the equity in your home - although, unlike bankruptcy, entering a Trust Deed is unlikely to result in your home being sold.
If you're struggling with your unsecured debts, speak to a debt adviser to find out if a Trust Deed would be the best approach for you, or if a different solution would be more suitable.