Bank Account Articles

Scottish Trust Deeds, are they the right thing to do if I owe a lot of money and can't afford to pay back?

When you owe a lot of money and you find yourself in a situation where your debt is growing each month despite your best efforts to repay it, then you have to look for alternative ways of stopping yourself spiralling downwards and into an increasing burden of debt.

For Scottish people who may unfortunately find themselves in this position they can look to enter a Scottish Trust Deed which can significantly help those who find themselves in an impossible position of being unable to pay back the debt they find themselves in.

The Positives of Scottish Trust Deeds:

There are some positive points to consider and listed here are some of the reasons why entering into one of these agreements will help you.

1. Debt Free in 3 Years
This will be a legally binding agreement with your creditors and once agreed & assuming you make all of the 36 monthly payments, all your debts which have fallen under this agreement will be cleared, so make sure you include ALL your debt or outstanding unsecured money owed from the outset.

2. Freeze Interest and all Charges
Once agreed, any future interest or charges from your creditors will be frozen, meaning that as long as you make the agreed monthly payments, your debt will not grow by a single penny.

3. Avoiding constant hassle.
Owing people money does become a big hassle as they will not stop chasing you until your debt is cleared, whether you have the money or not, your creditors will look to get repaid at every opportunity, HOWEVER once you have agreed a Trust Deed then your creditors can no longer chase you and any communication will need to be done via your Trustee, who will deal with everything on your behalf, including passing on their monthly payments.

4. Continue to live and work as normal
When agreeing how much you will need to pay, it is accepted that you will still need to live and work as normal, so any income required to pay your rent/mortgage, food, work related travel etc will take priority as these are seen as essential, so you should not be restricted from these because you have entered an agreement.

Things considered a negative regarding Scottish Trust Deeds:

1. If you are a homeowner and have equity in your property you may be required to remortgage which could have a double negative effect as you will have less equity in your home if you do that plus if you are on a good fixed rate mortgage, you may have to move to a different rate, meaning your overall monthly amount could rise considerably.

2. Only unsecured debts are covered, so if you have taken out a secured loan against your home, that cannot be included in a Trust Deed.

3. Making ALL the payments is ESSENTIAL - It is so important to understand that if you enter into a Scottish Trust Deed you understand that you CANNOT afford to miss a payment and if there is a chance that you might, then contact your Trustee as soon as possible to find out what can be done to ensure the Trust Deed does not fail as you will be breaking your side of the contract which could have serious consequences.

4. Your Credit Rating will be severely effected although if you are in this situation there is a fair chance it would have been anyway, but an adverse credit rating will have a negative effect on gaining any future credit.

5. It will be advertised in the Edinburgh Gazette, so whilst probably not hitting the front page it will be publish meaning there is a chance someone you know will see it.

So before entering into a Scottish Trust Deed we suggest you seek some professional advice and weigh up if this is the right course of action to take and if there might be any other more suitable options available to you.

What Can we do to Help if you are entering a Scottish Trust Deed?

The one thing we can do to help your situation is to OPEN A NEW BANK ACCOUNT as this will help protect your income immediately - any salary or wages paid into an old account could be held by the bank if they are one of your creditors, meaning your access to this money will be either severely or totally restricted.

Scottish Trust Deed Bank Accounts - Apply online here

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Disclaimer: Please note we offer these comments on the basis they are done so with the best intention of providing some useful help & guidence at the time of this website being published and we cannot accept any liability for anything that may be found at a later stage to be incorrect. We suggest in EVERY case, if you are considering entering into a Scottish Trust Deed you seek professional advice before doing so.

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