A trust deed is a form of debt management available to people in Scotland that allows those with debt over £5,000 to regain control over their finances.
Trust deeds are voluntary agreements between you and those you owe money to, allowing you to pay back fixed, regular amounts towards your debt (1) over an agreed period of time. Any debt remaining after this fixed period will be written off, leaving you debt free.
If you are considering this as an option, seeking trust deed advice from a debt solutions company can help you understand exactly what you will be signing up for when making this agreement.
Trust deeds are a protected form of debt management, meaning creditors will be unable to take action against you during the period of time the trust deed is in place. They can allow you to make affordable monthly payments, so your debt will not grow.
This is not a suitable form of debt management for those who cannot afford to make regular payments or those whose sole income is from benefits. Failure to make the agreed payments can result in action being taken against you or even see your debts increase.
Failure to cooperate with the deed can also lead to your trustee filing bankruptcy against you, which can further harm your financial status and credit file.
One of the disadvantages of a trust deed is that any property or assets you own can be seized and sold to help pay off the debts during the period the deed is in place. This includes your house or car, if you own one, and any other valuable items.
Another risk you run with trust deeds is that self-employed people may not be able to run their own businesses anymore. You are also unable to become a director of a limited company during the duration of your trust deed.
This means the running of your business may be handed over to someone else for the duration period or can even be sold to help pay off the debts.
Trust deeds also come with additional costs, so you will have the fee added onto your existing debts and will have to pay towards that as well.
It is perhaps best to seek advice from a debt adviser, as there may be more appropriate options for you.
If you are struggling with debt at the moment because of cost of living challenges, get in touch with us today to see how we can help.
References:
- https://www.citizensadvice.org.uk/debt-and-money/
