The Lingo Berries

Most people have never actually heard of a Scottish Trust Deed before. When people hear the phrase ‘Trust Deed’ they usually associate it with the property industry, which it is, but not in the sense of a debt solution. A Scottish Trust Deed is actually a government approved scheme to help Scottish residents get out of debt. Scotland has seen a surge in people suffering with debt problems, as well as England and the rest of the world, mainly due to the recession which was brought on by the banks. High flying bankers are sat at the top laughing while the government drives in more money for yet another bailout and it’s the people at the bottom, the taxpayer, who have to pick up the bill. Unfortunately we will never get rid of debt, it will be with us for decades and the likelihood is our grandchildren will have to pick up some of the bill. Anyway, I’m steering from the topic now…

So, what exactly is a Scottish Trust Deed? To summarise, it is an agreement between your creditors and yourself to repay a lower, set amount each month towards your debts for a 36 month period. Any remaining debt is then written off after the period has elapsed. It is very similar to an English Individual Voluntary Arrangement but with a more favourable criteria.

IVA’s are not set at 200 per month… Fact If you were to take out an IVA you would find yourself repaying the debt over a longer period of time, 60 months in fact. You also must be able to afford a monthly repayment of at east 200 and owe over 15,000 to 2 or more creditors. There has been a lot of misleading information in the press or from unscrupulous companies that IVA repayments are set at 200 each month, but to be honest, it also depends on other factors, such as the total amount you owe and if you have equity in a property. The most important factor is you must be able to repay 25% of the total amount you owe.

There is a set period for a Trust Deed which is 36 months, whereas an IVA is 60 months, 2 years in comparison and the minimum debt level is 10,000 as apposed to 15,000 (5,000 difference). The minimum percentage that must be repaid is only 10% as apposed to 25% with an IVA and the minimum repayment level is 150 per month, 50 less than an IVA. So if you are resident in Scotland, can afford at least 150 per month and owe over 10,000 in unsecured debt your luck is in!

Trust Deeds are not for everyone… So you have decided to look into this, but keep in mind, Scottish Trust Deeds are not for everyone. They are only meant for people who are struggling to repay their debts and cannot find a viable solution to their debt problems. You may have taken out too much debt, had a pay cut or lost your job to redundancy, all of which would be viable reasons to look into this Scottish Debt Solution. If you own your own home a Trust Deed would be the best option if you are in financial difficulty as it can prevent it from being repossessed by the banks.

Another bonus with the Trust Deed solution is the interest and charges are frozen, meaning your debt will not accumulate and means that the repayment you make each month is going directly to clearing the balance, unlike now where the majority of what you are paying will be going towards straight in the pockets of the banks.

There are downsides to the Trust Deed debt solution. Your credit rating will take a hit for the 36 month period you are on the programme and it will probably take some time to recover, but if you have been struggling with your debt for years then it is most probable that you will not want any more credit cards and loans and steering clear of debt will be your number 1 priority! So it is highly likely that you will not require your credit rating in this sense. The other downside would be your reputation. Some people may feel embarrassed or self conscious of the fact they are in the Trust Deed programme and will be worried what people think of them if they find out. But I think for the majority of us, being completely debt free for good would definitely override any insecurity!

For more benefits on Protected Trust Deeds and how it can help you get on the road to financial freedom. For more advice on Trust Deeds visit our website