If you owe over £10,000 to 2 or more creditors there is a form of debt help in Scotland which can eliminate up to 90% of your debt in as little as 36 months (3 years). It is a scheme which is backed by the government and any Scottish resident that fits the criteria can take advantage of it. It comes in the form of a Scottish Trust Deed.
What is a Scottish Trust Deed?
It is a legally binding agreement between you and your creditors to repay what you can afford towards your debts for a period of 36 months. After this period any remaining debt is written off and you walk away debt free, it’s as simple as that. It is very similar to an IVA (Individual Voluntary Arrangement) but the criteria works more in your favour.
Trust Deeds carry other bonuses too. It can also protect your assets, i.e. your car or your home from repossession, where unlike bankruptcy, you would be required to surrender them to your creditors. This can be a massive advantage if you are close to bankruptcy as it’s everyone’s worst nightmare to be faced with the prospect of losing their home.
Another bonus is that all the interests and charges are frozen so your debt will not accumulate. This is a massive advantage as the current average APR for a credit card is 29.7% and if you are only playing the minimum payment each month the majority of that money will be going on interest alone. For example, if you have a debt of £5,000 on a credit card with an APR of 29.7%, your minimum payment will be approximately £110 per month. Nearly £80 of this will be going on interest alone and only £35 will be paid off your debt. At this rate it would take you 12 years to repay the debt.
What is the process?
The process is simple. Firstly you must calculate how much your monthly repayment would be, this can only be done by a licensed Insolvency Practitioner, or otherwise referred to as a ‘Trustee’. A Trustee will do this be taking your income, expenditure and debt details. Once they has established how much you can afford to repay they will put a proposal to your creditors and upon acceptance, you trust deed will be granted. You will then make one payment per month to your Trustee who will in turn distribute your payment to your creditors each month.
Are there any come backs?
No. Once the agreement is in place your creditors are legally not allowed to contact you, only your Trustee can legally communicate with you regarding your debts. After the 3 year period is up any remaining debt will be wiped off.
What are the downsides?
Unfortunately, like most debt solutions there is a downside. The main downside to a Trust Deed is your credit rating will be affected whilst on the 36 month programme and you may struggle to obtain further credit in the future, but if you have been struggling with debts for some time it’s highly unlikely that you are going to want further credit in future. You want to get out of debt and not get back in it!
Also it can stay on your credit file for up to 6 years, but if you look at the amount of time it would take to repay a £5,000 debt on minimum repayment (12 Years). Then you could be free from debt in 3 years and have 9 years left, which is more than enough time for your credit rating to recover.
If you are one of the growing number of people struggling to meet their repayments each month and suffering from the after effects of the recession then the likely hood is you have started to look for a solution to ease the burden of your debts. Trust Deeds are a great solution for Scottish residents and have become a very popular form of debt help in Scotland as since the beginning of the recession debt has become an increasing problem not all across the globe. Many people are now looking for solutions to help them get out of debt and, luckily Scottish residents can use the Trust Deed process to their advantage and wipe off a massive percentage of what they owe, saving thousands of pounds and years in repayments.
For more information on Scottish Trust Deeds and to see if you qualify visit our website and use our free Trust Deed Calculator.