As households throughout the UK come under increasing financial pressure, it’s unsurprising that an entire industry has developed which advertises solutions to deal with unmanageable personal debt.
Many people remain unaware however that where you live in the UK determines which options are available to you. Residents of Scotland have access to a variety of measures to deal with debt difficulties that are unavailable in the rest of the UK.
A trust deed (often also referred to as a “protected trust deed” or a “Scottish trust deed”) is one such option. Trust deeds exist as an alternative to bankruptcy for residents of Scotland suffering from serious debt problems.
The marketing of trust deeds has caused some issues. Certain debt-help providers advertise them as being an easy way to escape from debt and to have much of it legally written-off. This view downplays the serious nature of a trust deed; it is a formal insolvency measure in many ways similar to bankruptcy and it should always be viewed as a last resort.
However, for anyone with serious debts that simply cannot be repaid within a realistic timeframe by other means, a trust deed might well be appropriate.
When signing a trust deed you appoint a “Trustee” to supervise your financial affairs for a fixed period (which is often three years). You commit to paying over your surplus income each month and also to paying over the value of any significant assets that you currently own (or may acquire during the trust deed term).
Due to the requirements connected to assets, homeowners should be cautious about their position prior to signing a trust deed. If they have equity in their home they will need to pay over the value of that equity. However, refinancing during a trust deed to release equity is currently virtually impossible. This may mean that some homeowners with equity may have to review other options to deal with their debts.
The technical nature of the trust deed process and trust deed guidance/legislation means that many people have questions that they need answering before they are prepared to go ahead with this debt solution option. In such circumstances making use of a trust deed forum might be appropriate as it enables the provision of expert trust deed advice alongside the shared personal experiences of individuals that are at various stages of the trust deed process.