Taking control of your debts
If you can't afford to repay what you owe, you may feel like you'll never regain control of your finances. You're not alone in feeling this way - many thousands of people get into this situation every year. However, there is help available.
One option for people who don't think they'll ever be able to repay their debts in full may be a Trust Deed. Available only to Scottish residents, they can reduce your unsecured debt repayments to a manageable level and give you a clear timeframe for repaying what you owe.
Explaining Trust Deeds
A Trust Deed is a formal arrangement between you and your unsecured lenders. It involves repaying as much of your unsecured debts as you can afford, usually for three years, before the rest is written off on successful completion of the agreement.
Most require you to make regular monthly payments towards the arrangement, based on what you can afford after you've covered your other essential costs. In return for keeping this up, you will be legally protected against any further action by your lenders, so you won't be at risk of bankruptcy/sequestration and you shouldn't receive any further demands for payment from those lenders.
A Trust Deed may also involve the sale of some of your assets (e.g. your car or other valuables) to raise money for your lenders, and if you're a homeowner you may have to remortgage to release equity from your home for the same purpose.
Remember that its a form of insolvency, and your credit rating will be seriously affected.
Is it right for me?
Potentially writing off some of your unsecured debt, a Trust Deed will only be an option if you can't afford to repay those debts in full within a reasonable period of time. If you can afford to do that, then another debt solution, such as a debt management plan, may be more appropriate.
Similarly, if you can't commit to regular payments then a debt solution that doesn't require this, such as bankruptcy, is probably a better option.
But if you do meet the criteria, then a Trust Deed could be the most appropriate way of getting your finances back on track.
One option for people who don't think they'll ever be able to repay their debts in full may be a Trust Deed. Available only to Scottish residents, they can reduce your unsecured debt repayments to a manageable level and give you a clear timeframe for repaying what you owe.
Explaining Trust Deeds
A Trust Deed is a formal arrangement between you and your unsecured lenders. It involves repaying as much of your unsecured debts as you can afford, usually for three years, before the rest is written off on successful completion of the agreement.
Most require you to make regular monthly payments towards the arrangement, based on what you can afford after you've covered your other essential costs. In return for keeping this up, you will be legally protected against any further action by your lenders, so you won't be at risk of bankruptcy/sequestration and you shouldn't receive any further demands for payment from those lenders.
A Trust Deed may also involve the sale of some of your assets (e.g. your car or other valuables) to raise money for your lenders, and if you're a homeowner you may have to remortgage to release equity from your home for the same purpose.
Remember that its a form of insolvency, and your credit rating will be seriously affected.
Is it right for me?
Potentially writing off some of your unsecured debt, a Trust Deed will only be an option if you can't afford to repay those debts in full within a reasonable period of time. If you can afford to do that, then another debt solution, such as a debt management plan, may be more appropriate.
Similarly, if you can't commit to regular payments then a debt solution that doesn't require this, such as bankruptcy, is probably a better option.
But if you do meet the criteria, then a Trust Deed could be the most appropriate way of getting your finances back on track.
Source...