How does a Scottish Trust Deed work?

If you’re considering the option of a Scottish Trust Deed then you’ll naturally want a good understanding of how they work and what to expect along the way.

In this article we look at the different steps involved with setting up and managing a Trust Deed.

Step 1: Before you enter into any type of debt management plan you need to sit down and put pen to paper. The first step towards getting debt free is to be clear on what you owe and to whom. Where possible you should also look at your credit file (which can be done free of charge online) so that you’re confident all of your debts have been incorporated. It can be all too easy to simply ‘forget’ about debts if you haven’t been pursued for them in a while but that certainly doesn’t mean that they don’t still exist.

Step 2: Once you’ve got full details of your debts then you’ll need to find a Trustee to administer and manage your finances. Whilst you’ll find a number of individuals and companies offering debt management advice it’s advisable to shop around and find the best fit for you. After all, if you decide to enter into a Scottish Trust Deed then this will be in place for a period of 4 years so it’s important you can work well with your advisor and have complete faith in their ability to do their best for you.

Step 3: Once you’ve found your preferred advisor, he or she will undertake an initial consultation to run through your financial situation in more detail. This will include a full review of your income and outgoings, an appraisal of any assets you might own (such as property or vehicles and so on) and data gathering about your existing debts. At this stage of the process you’ll be asked to provide as much documentary evidence as possible, for example wage slips, utility bills, mortgage statements and so on. You’ll also be asked for personal identification (such as a passport) to satisfy money laundering regulations.

Step 4: When your advisor has undertaken a full review of your finances, he or she will then start to draft a proposal for your creditors. This proposal will be based on your income and outgoings and, whilst being realistic (so that it hopefully gets accepted) will also leave you with enough money to live on each month. Once the proposal has been accepted then it can be extremely difficult to change so both you and your advisor need to be confident you can maintain the monthly payment being proposed.

Step 5: Once drafted, your signed proposal will be added to the Register of Insolvencies and your trustee will write to all your creditors. Thereafter your creditors have a period of five weeks to either agree or reject your proposal. On the assumption that there are no objections then you should have a protected trust deed after just five weeks.