A trust deed is a kind of formal debt solution available to Scotland citizens. It lets you pay off your debts in affordable monthly repayments, and the remainder of your debt will be written off at the end of the term, which lasts for approximately four years time. If your circumstances require a larger repayment period, you can negotiate with the lender for such a period. This solution lets a trustee act on your behalf and pays the creditors with the monthly installments.
Trust deeds have their own advantages and disadvantages similar to all other debt management solutions see here for more information. You should weigh the pros and cons and make sure this is the right solution for your debt situation before opting for a trust deed. Here are some of the advantages of a trust deed:
Fixed payment terms – A trust deed in Scotland would usually last for four years. In fact, you can become completely free of your unsecured debt within a few years with a trust deed.
Pay only what you can afford – You should pay only what you can afford after you have paid all the other monthly bills and expenses.
Debt is written off – The balance of your debt will be written off at the end of the four year term once you meet the conditions and complete the term. In fact, you can have a fresh start much sooner than getting involved in a Debt Management Plan where you need to pay all of your debts.
Creditor hassles stop – Once you opt for a trust deed, the trustee will contact your creditors and let them know that they are no longer allowed to take legal action against you or request payments from you. The creditors are given 8-12 weeks to update their records to accommodate your trust deed. If a creditor persists and contacts you after this period, you should contact the trustee and they will write to the creditor.
Keep your assets – Entering bankruptcy has many adverse consequences which may involve selling your assets (home, car, or other valuable belongings) to pay off your debts. This will stop when you opt for a trust deed. For example, you might be asked to remortgage your property if there is equity in it, but you will never be asked to sell your home.
No application fees or hidden fees – Your trustee will be paid using your monthly contribution amounts. You may have to pay the costs associated with setting up a trust deed at times. But no application or hidden fees.
No more interest and charges – Most debtors struggle to pay off their debts due to high interest charges, which could lead to spiraling debt. With a trust deed, all interest charges stop, and your debt will not further increase.