Frequently Asked Questions (FAQ)

 

Will I have to sell my house?

Not necessarily.

Your trustee will want to value your house if you own it to see how much equity is there. If the equity is above a certain amount, it might need to be released to pay off some creditors.  This may mean a remortgage, or they could let your spouse, another joint owner or a family member buy your share in the property with a lump sum. Your house could be left out of a Deed of Trust, but your creditors may well object to that, leaving you to face sequestration.

Leases can also be affected, and you may be in breach of your contract by entering formal insolvency proceedings. If the rent or mortgage is unreasonably high, your trustee can object to the level of expenditure in certain situations.

Can I keep my car?

It depends.

If the car has a high value you should expect your trustee to sell it. If the car is worth less than £3000, then you may be allowed to keep it if you need it for work and you are paying a contribution from your earnings. You could also argue that if you have children who need to get to school, and so on, that you need to keep it.

Can I include all my debts in my Trust Deed?

Only unsecured debts can be included in a Scottish Trust Deed. This includes credit cards, store cards, loans, outstanding utility bills (excluding council tax) and overdrafts. Secured debts such as loans guaranteed against your property, child maintenance, hire purchase agreements and mortgages cannot be included.

How long does a Trust Deed Last?

The term of a Trust Deed can vary, but it usually lasts for 4 years.

What happens if I can’t pay the agreed contributions?

If you cannot pay the agreed amount from any earnings, there is a payment break of six months. If this is exceeded, it may result in sequestration, and this may mean it takes longer for you to be clear of your debt.

If you are experiencing difficulties, always approach your trustee at the first hint of trouble.

Can a Trust Deed be cancelled by me once it has been set up?

A Scottish Trust Deed is a legally binding contract and cannot be cancelled easily. It might be that you need to consider other debt solutions and their associated advantages and disadvantages prior to making a commitment.

Is my credit rating affected by having a Trust Deed?

It is highly likely that entering into a Trust Deed in Scotland will adversely affect your credit rating, and it will remain on record for up to six years. While the arrangement is in place, it is also listed on the Insolvencies Register. Once it is discharged, however, you can start working on improving your score.

My Trust Deed is finished but I am still having problems getting credit. What can I do?

The credit reference agencies keep details of any listed insolvency for six years. You can request confirmation of your discharge and send this to the credit reference agency. If your creditors have been paid in full, you should tell them so. But if what they have recorded is factually correct, there may be nothing you can do to prevent this.

Is a Trust Deed the same as an IVA?

A Scottish Trust Deed is similar to an IVA in the fact that they are both legislated debt solutions, but they come with some differences and IVA Pros and Cons can be different to the advantages and disadvantages of a trust deed.