One of my friends was telling me about a unique debt solution that is used to help debt burdened citizens in Scotland. I started doing some research to help answer some of my Scottish trust deed questions. Here are some of the answers I came up with. If I’m wrong or have missed something, feel free to add your feedback in the comment section.
What does a trust deed do?
A trust deed is set up by a third party based on your specific circumstances. The trust deed reduces the amount of debt you owe and creates a contract between you and your creditors for you to pay back your debts over a 3-4 year period.
Who is eligible for a trust deed?
To be eligible, you have to be a Scottish citizen and demonstrate that you have more debts than you can afford.
What is the disadvantage of using a trust deed to get rid of your debt?
As far as I can tell, the main disadvantage is that your credit will be ruined for at least several years. Other potential disadvantages would be that you could lose some of your real assets like your car or house in some situations.
Which debts does it cover?
A trust deed is a contract that only covers your unsecured debts. If you have debts that are based on real assets – like your home or car, a trust deed will not resolve those debts.
Who enforces the contract?
A trustee is appointed to you and it is that person’s duty to make sure that you pay your contributions and that the creditors get the money that was agreed upon when the contract was entered.
Does the service cost money? If so, how do I pay for the trust deed service?
Like any service, it costs money to enter into this contract. Hopefully the money you save will more than offset the costs of the service. Fortunately, the costs are part of the contract and the service fees come out of the contributions you make to the trust.
Can I get out of a trust deed contract?
Probably not. You are obligated to pay the agreed upon contract payments. If you stop payment or go into default the trustee has the right to freeze your bank accounts and perhaps sequester you to the courts for resolution.
How is the trust deed payment calculated?
The amount of money that you can afford to pay is calculated by looking at your income and then subtracting the payments from all of the secured debts that you owe. The amount that is left over is used to compute how much you can afford to pay each month.
Any other questions or answers you’d like to know?