Scottish Trust Deed - The Scottish Debt Solution
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...
What is a Scottish Trust Deed? In a nutshell, it's a legally binding agreement between you and your creditors to repay what you can afford towards your debts over a specific period, which is usually 36 months (3 years), any debt left over after that period is written off. It is a lot like the Scottish equivalent to an IVA (Individual Voluntary Arrangement) although the criteria is slightly different, but more in your favour actually.
Most people think IVA's are set at 200 per month... With an IVA the minimum repayment period is 60 months (5 years) and you must owe over 15,000 and be able to afford at least 200 towards your debts each month. Most people think all IVA's are set at 200 per month thanks to a lot of companies misleading consumers with false advertising but the truth is it depends on how much you owe and the amount of equity you have in your property (if you have one). The bottom line is you must be able to repay at least 25% of the total debt.
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!
No everyone is suited to a Trust Deed... So if you have been sold on the benefits of a Trust Deed, remember they are not for everyone. They are only meant for people who cannot find a suitable solution to their debt problems and who are genuinely struggling to keep up their repayments on their debts. Viable reasons to take out this Scottish debt solution would be if you lost your job, had a reduction in salary or you took out too much debt. Trust Deeds are exceptionally good if you are a homeowner who is facing financial difficulty as it can prevent repossession.
Trust Deeds have an additional bonus... the interest and charges are frozen! Meaning your debt level will not increase like it probably is now and the majority of your monthly repayments go towards the banks profits and only a minute percentage of your debt is actually paid off each month.
There are downsides though. Your credit rating will be affected during the 3 year period whilst you are in the Trust Deed program and wont recover until long after, but if you are in a serious position with your finances the likely hood of you wanting to obtain further credit after the period is slim as most people would want to steer clear of debt for good! So, on that basis you will probably not require the use of your credit rating. Your reputation will also be damaged, although this is not important to everyone. I think relieving the stress of being in debt actually outweighs this by miles!
by: David Baddeley
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