Scottish Trust Deeds FAQ's
Below is a list of the most frequently asked questions about Scottish Trust Deeds (TD). If the question you want answered does not appear please do not hesitate to contact us and we will answer it for you.
- What is a Trust Deed.
- What are the advantages of a Trust Deed.
- Is a Trust Deed a loan.
- Will I be credit checked before acceptance.
- Can I enter a Trust Deed if I already have CCJs against me.
- Does it make a difference if I am a homeowner.
- If I am a homeowner, will I have to release equity in my home.
- Do I have to tell my partner.
- Does a Trust Deed cover all of my debts.
- What is the difference between a secured and unsecured debt.
- Do creditors have to accept a Trust Deed.
- Can an individual creditor refuse to accept an Trust Deed.
- Will the Trust Deed affect my credit rating.
- Will the Trust Deed prevent my creditors taking recovery action.
- How long will the Trust Deed last.
- What if my circumstances change.
- Can I cancel the STD once it is set up.
- What happens if I just stop paying into the Trust Deed.
- How are the trustee's fees collected.
- How long does it take to set up an Trust Deed.
- Will interest and charges be frozen while the Trust Deed is set up.
- Can a creditor take recovery action before the Trust Deed is protected.
- What happens if the Trust Deed is not approved.
- What does it mean when a Trust Deed becomes "protected".
- What am I committing myself to if I sign a Trust Deed.
- What happens to the interest and charges on my debts.
What is a Trust Deed?
A Trust Deed is a process that enables an individual living in Scotland who is struggling with unmanageable debt the opportunity to make a formal proposal to their creditors to clear their debt. All creditors are circulated with the proposals being made and providing no creditors who have claims totaling greater than 1/3 of the total debts, vote to reject the proposals then the Trust Deed becomes protected and therefore legally binding on all creditors that were circulated. Learn more about Scottish Trust Deeds.
If I am a homeowner, will I have to release equity in my home?
You will almost certainly have to release equity in your home into the Trust Deed usually as part of the final settlement. However, there are mechanisms that can be put in place to protect your home such as "buy-back" or extra contributions.
What is the difference between a secured and unsecured debt?
A secured debt is a debt secured against an asset that you own. Typical secured debts will be a mortgage, a secured loan, a car loan, etc. An unsecured loan is any loan not secured on an asset, such as a bank overdraft, a personal loan, a credit card, store card, etc.
What does it mean when a Trust Deed becomes "protected"?
This means that no further action can be taken against you by your creditors for recovery of the money you owe them. Lenders have to accept the balance of your Trust Fund account as full and final settlement at the end of the three year period.
What am I committing myself to if I sign a Trust Deed?
You are entering into a contract to repay your debts, usually at a reduced rate. As such you agree to:
- Co-operate with the Trustee
- Pay the agreed monthly contribution
- Not take any further credit
- Advise the Trustee if you receive any unexpected windfalls in excess of £200.