Category: Types of Debt

What debts does a Protected Trust Deed include?

Posted on by Craig Stocks
The type of debts that can be included in a Protected Trust Deed are generally those that are described as unsecured, with some exceptions. When you enter into a Protected Trust Deed in Scotland, most of your unsecured debts will be included and this may include:
  • Credit Cards
  • Personal Loans
  • Overdrafts
  • Catalogues
  • Gas and Electric Arrears
  • Council Tax Arrears
  • Payday Loans
  • Store Cards
  • Buy Now Pay Later Agreements
  • Any Other Outstanding Personal Bill e.g. Vet Bills
There are other debts that can be included in Trust Deeds, but we recommend contacting us today confidential advice as it’s important to understand not only the debts that you have and whether or not debts those can be included in a Protected Trust Deed, but also other aspects include your affordability, total debt owed and your income vs. expenditure. On some occasions, an alternative Scottish debt solution may be more beneficial for you.

What types of debt are excluded from a Protected Trust Deed?

Typical debts that aren’t included within a Protected Trust Deed include:
  • Mortgages
  • Secured Loans
  • PCP and PHP Agreements
  • Hire Purchase Agreements
  • Court Fines
  • TV Licence Arrears
  • Student Loans
  • Child Support Arrears
You can also find out more about the differences between secured and unsecured loans, if you’re unsure what this means.

Can joint debts be included in my Protected Trust Deed?

A joint debt in Scotland is a debt that has your name and the name of the other person you entered into it with on the agreement. A joint debt can be included in a Protected Trust Deed, however, the other person named on the debt will still be responsible for making payments towards it. This is also true of guarantor loan debts in Scotland. If you have some of the debt written off, the other person will still be asked to pay the remaining money back, therefore that debt isn’t written off in the same way that the other debts that included in the Protected Trust Deed would be written off. If you have joint debts, and are thinking about applying for a Protected Trust Deed, you should contact us for confidential advice first. We can let you know how it would affect you and the other person named on the debts.

What happens to my debt during a Protected Trust Deed?

Before Trust Deeds are agreed, proposals are put to the creditors who monies are owed to. If the creditors agree to the Trust Deed, you’ll make monthly payments towards the Trust Deed for 48 months, or 60 months if this was agreed as an extended duration for the Trust Deed. When your Protected Trust Deed has been complete, you’ll be discharged. At this point, any balances outstanding on the debts included in your Trust Deed will be written off.

Is a Protected Trust Deed right for me?

To find out if a Protected Trust Deed is right for you, we advise you to try our online Trust Deed Wizard® tool. This will begin the process of finding a debt solution for you, based on your own unique circumstances. When you’re looking at the types of debts that can be included in a Protected Trust Deed, you may have debts that can be included such as those owed to family and friends but you may benefit from speaking to Trust Deed Scotland® in order to find out the advantages and disadvantages of doing so. There are alternative solutions to Trust Deeds in Scotland, one of which is the Debt Arrangement Scheme. When you speak to an expert money advisor, all pros and cons will be explained to you, and sometimes the type of solution that fits your needs best may not be a Protected Trust Deed after all. When considering your decision on whether a Protected Trust Deed is right for you, we have previously written articles in response to questions we’ve previously been asked such as Is A DAS Worth It? or Is A Trust Deed A Good Idea? Trust Deed Scotland® has thousands of reviews on Trustpilot, however, we also offer Debt Arrangement Scheme and Sequestration advice, which means you will be given balanced, fair advice that puts you in control of the decision-making process.

What Is Wage Arrestment In Scotland?

Posted on by Craig Stocks

What Is Earnings Wage Arrestment In Scotland?

Wage Arrestment in Scotland is increasingly being used as a tactic to recover debts in Scotland, with unpaid council tax arrears debt being the most common cause of a debt being enforced by way of an attachment of earnings. With the Earnings Arrestment enforcement action type, your employer is instructed by law to deduct money directly from your wages. As part of the ‘diligence’ process – A legal process that allows creditors to collect monies where a court order has been unsuccessful in forcing you to pay. Before a Wage Arrestment can be put in place, you will either have had a decree awarded against you or will have received a summary warrant for the debt you owe. Once an Attachment of Earnings is secured, your employer must deduct an amount from your net earnings over time you get paid. If it’s a council tax debt, his Wage Arrestment deduction will then be passed on to your local authority council to pay off your council tax debt. Although most commonly used for council tax debt, wage arrestment can be used for other debts as well. It is not necessary for the creditor to raise a court action before they serve a Charge for Payment. This is a more typical route for debts that are not regulated by the Consumer Credit Act (such as credit cards and personal loans) using the procedure known as summary diligence. A Wage Arrestment is used to collect a single debt owed to one creditor. Current maintenance arrestment is used to enforce the payment of maintenance, such as that awarded by a court during a divorce settlement.

Multiple Wage Arrestments

A Conjoined Arrestment Order is granted by the court to enforce payment of two or more of the same type of debts. The important thing to remember is that a conjoined arrestment can be used for two or more wage arrestments that are in place at the same time but not for an earnings arrestment and current maintenance arrestment. Technically, it’s possible for the local authority to issue you with an Earnings Arrestment for every year of outstanding debt as they are counted as separate debts. However, the amount taken each month would not increase, but would instead be divided on a pro-rata basis between all debts they are chasing you for. Most Scottish councils tend to do it for one year, and when that debt is paid do it again for the next year. They would normally collect the earlier years first. It may be worthwhile double-checking that the arrestment is legal and that the money is owed. If the creditor has not issued a Debt Advice and Information Pack (DAIP) then the procedures have not been followed correctly and you can argue that the Wage Arrestment is not legal. If you decide to pursue this, seek advice first.

Typical Wage Arrestment Example

The usual process prior to getting a wage arrestment for Council Tax debt typically follows this path:

Reminder

The normal method for paying council tax is in 10 monthly instalments. If you miss a payment, the council should send you a reminder giving you seven days to pay the outstanding amount.

Final Notice

If you fail to pay the missing instalment after a reminder, however, you will lose your right to pay by instalments. At this stage, you will receive a final notice giving you 14 days to pay the whole amount outstanding for the remainder of the financial year. It is still possible with some local authorities in Scotland at this stage to negotiate to pay in instalments if you contact them directly. If you are at this stage, it’s important to act as soon as possible. Your council tax should be treated as a priority debt, alongside other utilities and your mortgage/rent so make sure you do not pay unsecured debts such as credit cards and personal loans ahead of any priority debts. No matter what the credit card lender says, they are always a lesser priority debt to pay but that doesn’t mean you should ignore these debts either. Firstly, try to make reasonable arrangements to pay, Second, if that fails, or you feel your debts are more severe, contact a qualified debt advisor ASAP.

Summary Warrant

If this lump sum is not paid then the council can apply to the sheriff court for a summary warrant. This is a certificate from the sheriff court stating the amount of council tax you owe. You will not have the opportunity to negotiate with the court before one is granted. You will only know about it the summary warrant when you receive notification of it in the post. You do not have to be told that the council is applying for a summary warrant. The summary warrant is issued by Sheriff Officers in Scotland. It will state the amount due and who to contact to arrange to pay this amount. Your payments are no longer made to the local authority but then instead, to the Sheriff Officers. The amount due will have increased as there is an automatic penalty fine of 10% when a summary warrant is issued.

Arranging Repayments

At this stage, you can arrange to repay the money at a rate that is comfortable for you. If you decide to do so make sure you come to an arrangement that you will be able to stick to. Remember, priority bills are more important than non-priority bills e.g. credit card debts. It is better to pay less regularly over a longer period of time than to try to stretch yourself and risk missing payments.

Charge For Payment

A Charge for Payment is a legal document that is served in Scotland by Sheriff Officers and Messenger at Arms. They are served to formally demand payment of money and give only 14 days to make payment. If the Charge for Payment is not complied with there are severe consequences. An earning arrestment as discussed, or bank account arrestment. Or an attachment of property held on your home or other assets such as a vehicle. The most common property to be attached by Sheriff Officers are cars, however, they can attach most items that are kept outside the home or business property. Even if it is kept in business premises, garden shed. A Charge for Payment doesn’t need to be served to execute an inhibition. An Inhibition in Scotland is another form of diligence, which makes it a formal, legal debt recovery tool. It allows a creditor to stop you from selling your home, or re-mortgaging without paying them. It doesn’t give them the right to force the sale of your home. This is the typical process that local authorities will pursue to enforce their outstanding Council Tax debt, but remember this can be used for other types of debts. Parking fines are another example of a creditor that uses this enforcement type. A Charge for Payment can quickly escalate e.g. an unpaid bus lane contravention fine debt can go from a manageable £90 to almost double with a fee of £81.16 added; the same debt then becomes £171.16. This fee cannot be removed thereafter.

How Much Of My Wages Can Be Arrested?

There are rules about how much money can be taken from your wages in Scotland, and also procedures in place to govern what happens if more than one creditor tries to arrest your wages. The earning arrestment amount taken from your wages depends on how much you earn. In April 2019, the protected minimum balance increased from £494.01 to £529.90. The exact amount that will be reduced from your debt can be found here. Any payments for commission, bonuses or statutory sick pay will be considered as part of your wages.

How Will My Employer React To My Wage Arrestment?

It is your employer’s legal duty to deduct whatever the courts insist on from your wages. If an employer fails to arrest your wages once lawfully instructed by a Sheriff Officer, they can be held liable to the creditor for the amount that they should have taken off your wages. Furthermore, they too can then be taken to court themselves and ordered to pay the amount they should have or become subject to the Sheriff Officers themselves. For this reason, employers must arrest your wages when told to do so. Your employer can also deduct a £1.00 administration fee every time the money is taken from your salary. Wage arrestment can be uncomfortable for you at work but it is not likely to be more than that, other than an increased administrative burden for your payroll team. However, you may, as a condition of your employment, have a clause in your contract that states that wages arrestment is a matter for which you should be disciplined. This may more likely be the case if, for example, you work in the financial sector. An Earnings Arrestment Order may be considered a disciplinary matter by some employers. In some situations, you can apply to the court for a Suspended Attachment of Earnings Order. If you can supply valid reasons why the wage arrestment should be suspended, you may be able to prevent it. One such reason to apply to the court for a Suspended Attachment of Earnings Order may be dismissal or disciplinary proceedings at work. Any responsibly structured organisation would typically only declare a Wage Arrestment on a need-to-know basis; therefore it’s reasonable to assume that such knowledge within a workplace will not become part of the workplace gossip.

What Happens If I Change Jobs?

If you change your job during the Earning Arrestment, then your Wage Arrestment will stop, due to having no earnings for that employer to deduct your wages from. It is your duty to ensure that you inform the Sheriff Officers of your change in employment. However, your previous employer can be instructed to supply details of your new employment to the sheriff officers where it is known. Most-likely because you had to give them as an employment reference. The Earning Arrestment, therefore, will most likely follow you.

Can My Benefits Become Arrested?

No, if you are in receipt of Universal Credit or any other benefits, a Wage Arrestment cannot be collected from your benefits payment.

How To Prevent A Wage Arrestment Charge For Payment?

A Statutory Moratorium can be registered with the Accountant in Bankruptcy office. Typically this is accepted, provided that one has not already been registered within the last 12 months; This prevents creditors from taking any further enforcement action for a period of six weeks. This is a free application process and can be done relatively quickly. Statutory moratoriums’, however, only allow some breathing space and it is important that the applicant looks to find more long-term debt solutions, including formal debt solutions such as Trust Deeds, Debt Arrangement Scheme or payment in full of the original debt. Assuming of course, that you haven’t found some other means to repay the debt naturally. Remember too that debt collection agencies can use suggestive words in their telephone conversations, or send letters that imply that a Wage Arrestment and/or other enforcement action is imminent against you but it may be a threat at that stage. It is advisable that you seek advice first from an experienced debt adviser, as to be most effective the procedure should only be used when it is absolutely necessary.

How To Stop A Wage Arrestment Charge For Payment?

A Statutory Moratorium should be used, even after a Charge for Payment has been served and has expired. Again, this allows six months breathing space to allow you to pursue a more permanent solution. Whether that be looking at long-term debt management tools such as Trust Deeds, Debt Arrangement Scheme or where possible, payment in full of the original debt upon securing extra funds. Alternatively, even after a court order has been awarded, or a summary warrant granted, you can apply for a Time to Pay Order. A Time to Pay Order allows you to enter an instalment plan with the lender, or local authority where it’s outstanding Council Tax Arrears and providing it is maintained, will prevent a Charge for Payment being relied upon for any further action. If you want to prevent or stop a Wage Arrestment Charge for Payment, get in touch with a qualified money advisor today.

Wage Arrestment Debt Advice

If you’re worried about debts, worried about the threat of having a wage arrestment, have received a decision or decree, or had court action taken against you we’d recommend getting tailored debt advice from us, as this can help you make an informed decision on the best way of dealing with the wage arrestment either before it happens, or after it has been put in place. Our experienced Scottish debt help team at Trust Deed Scotland® specialise in giving debt advice to people living in Scotland. We can talk about your situation and help you find a solution to resolve your debt problem. We’ve helped over [volume] people get out of debt in Scotland, and we’ve got more five-star reviews than any all other Trust Deed providers combined. Call us on 0141 221 0999, or try our Trust Deed Wizard® to get started now.

Priority Debts vs Non-Priority Debts In Scotland

Posted on by Craig Stocks
When you owe money to several companies and don’t have enough income to pay them all – the calls, letters and text messages may start to cause you stress. With the cost of living continuing to rise, it can be difficult to know which debt should be paid first. Indeed, this is a dilemma that is affecting many people across the country right now. Some bills that you receive are regarded as priority debts because the consequences of not paying those priority debts are greater than the consequences of not paying the other non-priority debts For example, if you don’t pay your mortgage, your home could be repossessed. If you don’t pay your rent, you could be evicted. Whereas the consequences of missing a credit card payment do not have such a severe consequence. However, this doesn’t mean that you should ignore your non-priority debts as not paying back loans, credit cards and things like a bank overdraft can create problems for you too. You must always pay these priority bills before your other debts. Even with Coronavirus measures in place, where possible, these debts should be paid as priorities, because the consequences of non-payment can be serious. If you have unaffordable, unsecured debt that’s making it more difficult to pay your priority bills, then it’s really important that you get tailored and confidential debt advice as soon as possible. Remember to always get any payment breaks confirmed with your lenders – never assume that it’s an automated process. If you’ve been made redundant and forced to claim Universal Credit, or you have been furloughed – these may be enough to reorganise your priority and non-priority debts – however, make sure you get proof of this as the lender will usually ask for proof of your change of circumstance. Your unsecured debt is classed as ‘non-priority’ because the consequences of not paying these each month are much less severe than not paying your priorities each month. Trust Deed Scotland® can take a look at these debts with you and give expert debt advice and if they are unaffordable, we can provide solutions on how best to pay these debts while you ensure that you’re on top of your most important priority debts. Trust Deeds, Debt Arrangement Scheme, and other tools exist which allow you to reduce unsecured debts down to a more affordable level.

What Is A Priority Debt In Scotland?

Typical examples include the following debt types: Mortgage – not paying your mortgage could result in your property being repossessed. Rent arrears – not paying your rent could result in you being evicted from your home. Child maintenance – not paying your child maintenance service can result in your wages being arrested, goods being removed from your property and a liability order being made against you. Council tax arrears – not paying your council tax could result in your wages being arrested, or goods being removed from your property. Utility bills – not paying your gas and electric may result in you getting disconnected, or a prepayment meter fitted. Broadband & TV – not paying for your broadband & satellite tv services could result in you being connected.

What Is A Non-Priority Debt In Scotland?

  Failing to pay non-priority debts is usually less serious than not paying a priority debt. The most important debts that you have are not necessarily the biggest ones. You can’t be sent to prison for not paying non-priority debts. However, your creditors may take enforcement action against you if you do not pay them. All non-priority creditors should be treated fairly. You should not make full payments to one creditor while reducing payments to another. If you cannot afford the minimum payment to any of your non-priority debts, you should make reduced payments to all of them using a pro-rata calculation. Failure to do so could result in your debt being passed on to a debt collection agency and a Decree (CCJ in Scotland) being made against you. More likely, the non-payment of unsecured debts will firstly result in a default notice being served against you. When a default notice is issued against you for missed payments, you will find your credit rating is affected. Contact Trust Deed Scotland® for advice on 0141 221 0999.

Non-Priority Debts in Scotland include:

Credit card debts, store cards, and personal loans. Bank overdrafts, payday loans, catalogue debts. Money that you borrow from your friends and family is also regarded as a Non-Priority debt. If you have unaffordable debts and you’re struggling to repay them all, don’t worry you’re not alone. an experienced debt adviser can help you separate your priority and non-priority debts before explaining what options may be available to you for dealing with them.

Struggling With Non-Priority Debt In Scotland?

  If you’re struggling with non-priority debt in Scotland – Work out your budget to check how much you have left each month after all your household bills have been paid. You can then use any surplus income to clear your priority arrears as quickly as possible. You can discuss your circumstances with your creditors and offer reduced payments to non-priority debts – this will help free up as much surplus as possible for the priority arrears. Then, when you contact your non-priority creditors, explain why you’re in debt. If you can’t make an offer of repayment straight away, ask for more time, for example, 14 or 28 days. This will give you more time to get expert advice and work out your budget longterm. It’s important to try to pay at least the regular instalment in the meantime. If you can’t do this which is understandable, pay as much as you can afford – even a payment of £1 to the non-priority debt shows a commitment to repay your debs and again allows you time to get help as soon as possible. If you feel like you’re really struggling with unaffordable debts – Don’t worry. You’re not alone. Trust Deed Scotland® have helped thousands of people in Scotland since 2009. We have dealt with cases that included council tax arrears, credit card debts and payday loans. We’ve successfully prevented and lifted creditor enforcement actions such as Wage Arrestments. Whatever the cause of your money problems, we can help you find the way out and make a fresh start. If you have over £3,000 of unaffordable, non-priority debt, and live in Scotland, Trust Deed Scotland® will help find the right solution for you. Contact us on 0141 221 0999, or find out which solutions you may qualify for by using our free debt calculator tool online.

Best Bank Accounts For Trust Deeds

Posted on by Craig Stocks
You can operate a normal, basic bank account during a Trust Deed or DAS in Scotland – Entering into an arrangement doesn’t stop you from having a basic account. However when you’re exploring options for the best bank account to have while in a Trust Deed or DAS there are some considerations. You may need to switch to a new bank account before the Trust Deeds starts. The two main reasons for needing to switch bank account:

Frozen Bank Accounts & Bank Account Closures

Some banks may choose to freeze your bank account if you enter into a Protected Trust Deed or Debt Arrangement Scheme. Banks monitor insolvency registers. However, your bank account is more likely to be frozen if you owe the same bank money, and in that case – a tactic known as ‘setting off’ is more likely to be used.

Setting-Off

The term ‘Set-off’ describes a bank taking money from one account to repay another. They do not need to seek permission fro you to do this. This is a commonly used tactic where you had a credit card or personal loan with the same company that you have your current account with. You may, or may not also have an overdraft facility with that company; expect that to be removed also. You can avoid set-off by moving your current account to a bank that you do not owe money to. A frozen bank account will leave you unable to pay your household bills and other priority bills so it is therefore important that you seek advice on this.

What Do I Need To Open A Basic Bank Account?

You’ll normally need proof of identification and proof of your address in order to open a new bank account when entering a Trust Deed. Proof of identification includes:
  • A passport
  • A photocard driving licence
  • A letter confirming your benefit entitlement
  • HMRC tax notification letter
You can then use one of the following documents for proof of your address:
  • A driving licence (either new or old)
  • Your TV licence
  • A recent electricity or gas bill
  • A recent council tax bill
  • A recent letter about your benefits
  • A recent letter or statement from another bank
If you don’t have a passport or photocard driving licence you may need to ask the bank what types of ID that they’ll accept before you try and open an account with them.

What If The Bank Won’t Let Me Open An Account?

Banks can’t use your credit rating as a reason not to give you a basic bank account. However, they don’t have a legal obligation to provide you with one either. They’ll normally prevent you from having a bank account if you’re an undischarged bankrupt. I.e. you’ve only just Sequestrated yourself. Or if there’s any record of fraud on your credit file. If you’ve applied for an account and a bank has turned you down, you need to make sure that they were assessing you for a basic account rather than a current account. However, as a leading provider of debt advice in Scotland, fortunately – Trust Deed Scotland has experience of this and we can, therefore, recommend the best banks to open an account with prior to entering a Trust Deed.

Recommended Best Banks In A Trust Deed

Before committing to a Trust Deed, a personalised illustration should be carried out to find out who you owe monies to and any potential solutions that you may qualify for. Our current list of recommended banks for individuals entering Trust Deeds are as follows: Many people we’ve spoken to  ask us which is the best bank account for bad credit and its more important that you ensure that it’s a basic bank account rather than a current bank account. Whether you have a good, or poor credit rating is not as important when seeking a bank account that you can use in a Trust Deed. There are also some lenders who specifically advertise bad credit bank accounts and these usually come with a chargeable amount. Therefore, if you decide to open up a new bank account, it is recommended that you consult with an expert debt advisor beforehand, in order to get a better understanding of your options.

Joint Bank Accounts In A Trust Deed

You can continue to use a joint bank account during your proposed debt solution. However, there will be a financially associated link, so this is perhaps best avoided if the other person has a good credit rating.

Dealing With Bank Account Issues While In Debt

If you have debt with your bank or you’ve had money taken from your account to cover a debt, let us know and we’ll help you to find out what your options are. You can try our Trust Deed Wizard tool to get started, or give us a call on 0141 221 0999. We’re here to help and will always have your best interests at heart.

Best Way To Consolidate Debt In Scotland?

Posted on by Craig Stocks
If you’re experiencing financial difficulties and are assessing your options to repay your debt, you may have considered that a consolidation loan is the best way to consolidate debt for you. But don’t discount the options of Trust Deeds, Debt Arrangement Scheme, and alternatives because there are circumstances where one of these debt management tools could provide a more suitable solution. Whilst at first glance the solutions may appear to be similar and share many of the same advantages, fundamentally, they are very different. Consolidating debt usually involves taking out new credit in the form of a Debt Consolidation Loan to pay off existing credit. Extra costs can be involved and to understand the risks, it’s important to get impartial advice before going ahead with your application. Statistically, many people who take out a further debt consolidation loan will end up using credit again. Therefore, they’ll then be repaying debts to more than one company again. If you’re struggling with unaffordable debts at the moment, you may not be able to afford payments to a Debt Consolidation Loan. Examine your income and expenditure to find out what money you have available and make sure you can comfortably afford the repayments. Which option is best for you will be heavily influenced by your personal circumstances. You should, therefore, take time to understand each option, to ensure you come to an informed decision and always seek balanced expert debt advice before committing to any financial product. Here are a list of the main differences between a Trust Deed and a Debt Consolidation Loan, which can be used to assess the best way to consolidate debt on your terms.

Duration

Loan: The duration of a debt consolidation loan will be determined by how much you borrow against how much you can afford to repay each month. The maximum duration typically for an unsecured consolidation loan is 10 years. Trust Deed: The Trust Deed has a fixed duration of typically 48 months, after which the Trust Deed completes and unaffordable debts are satisfied. Any debt left unpaid at this point is written-off under the terms of the Trust Deed.

Affordability

Loan: Repayments to a consolidation loan are offered by the creditor based on the amount required each month to repay the debt over a given duration. The borrower must assess whether they can afford the repayments for themselves before they accept the agreement. Trust Deed: Payments are set to what is deemed to be affordable to you.

Debt Written Off

Loan: There is no debt write-off with a consolidation loan. Unless any settlement figures can be negotiated in writing, the full debt must be repaid. Trust Deed: Any outstanding debt remaining after the fixed term has completed must be written off by your creditors.

Credit Rating

Loan: If you keep up to date with all your repayments, your credit score won’t be affected by having a consolidation loan. Trust Deed: Entering into a Trust Deed has a detrimental impact on your credit rating for 72 months. If you have a poor credit history (for example, a record of missed payments and defaults, decrees, or previous insolvencies, such as a Trust Deed or Sequestration) you’re more likely to be offered consolidation loans with higher interest rates. If this is the case, consolidation loans may not be the best way to consolidate debts for you.

Flexibility

Loan: A debt consolidation loan is a legally binding contract, just like any other unsecured loan. Failure to maintain payments can result in legal action being taken against you which could, ultimately, lead to you being sequestrated. Trust Deed: A Trust Deed has a degree of flexibility if payment problems occur. A temporary payment break can be given by the Insolvency Practitioner if deemed necessary, or they could reduce your Trust Deed payments and extend the Trust Deed term without the need for creditor approval.

Fees and Costs

Loan: All interest and administration costs are built into the loan repayments and paid for by the borrower. Trust Deed: All Trust Deed fees are deducted out of the monthly Trust Deed payments and in most circumstances, are borne by the creditors. There are typically no initial setup fees for a Trust Deed from a reputable firm, like Trust Deed Scotland.

Debt Consolidation Example – Loan Vs Trust Deeds

If you are currently paying £636 per month on debt repayments, owe £20,000 and found a loan at 12% APR. This would compare as follows: Loan: Debt Consolidation Loan Required ✓ £20,000 ✓ Term 48 Months ✓ New Monthly Payment £521 ✓ Total Repaid £24,992 ✓ Monthly Debt Repayment Reduced by 18% Trust Deed: Total Debt Included ✓ £20,000 ✓ Term 48 Months ✓ New Monthly Payment £175 ✓ Total Repaid £8,400 ✓ Monthly Debt Repayment Reduced by 61% You may be able to get a debt consolidation loan with a more favourable APR%, or longer term. These may be typically secured against your property. However, if you’re already struggling with debt – the APR% may be typically higher. We would always suggest looking at all Scottish debt solutions also.

Debt Consolidation Loan Considerations?

If you think that the best way to consolidate all your debts is a debt consolidation loan, rather than a Trust Deed or other Scottish debt solutions.
  • Always pay your existing debts in full
  • Cut up all your credit cards and cancel previous credit agreements, otherwise, you might be tempted to borrow more money
  • Get tailored debt advice before going ahead with this option – there may be better ways for you to deal with your debts
 

Where Can I Get Scottish Debt Help?

You can get Scottish debt help today with Trust Deed Scotland®. There are a variety of debt solutions available in Scotland to help deal with your debts, regardless of the minimum or maximum amount of debt that you owe. If you’re looking to find out the best way to consolidate debt, you can find out more about the solutions by visiting our online debt advice page. Or, if you would prefer to speak a qualified debt expert, you can give us a call on 0141 221 0999 to find out more. Any advice offered is confidential, friendly, and non-judgemental. Find 1000’s of 5* Reviews on TrustPilot. We’re the leading debt relief company in the whole of the UK.  

Coronavirus Guarantor Loan Payment Breaks

Posted on by Craig Stocks
EDIT: August 2021 – Payment breaks have been replaced by tailored support. If you have difficulty repaying a debt outstanding to a guarantor loan call 01412210999 for the latest advice
New Coronavirus credit card and overdraft payment break measures to now allow for home credit and guarantor loan payment breaks, meaning greater guarantor loan protection for both borrowers and those who act as the guarantor in the arrangement. Trust Deed Scotland® – the number one rated on Trustpilot for debt help in Scotland welcomes the latest guarantor loan payment break developments. Guarantor loans continue to be one of the most worrisome debt types in Scotland for individuals struggling to repay their debts due to the impact of defaults not only affecting the finances of the borrower but also on that of the guarantor. The regulatory body had already released proposals for lenders to offer a temporary payment freeze on loans and credit cards for up to three months, but these have been now been confirmed and extended to a wider range of creditors, including guarantor loans. The regulators have confirmed that it’s going ahead with a package of measures that ensure lenders offer temporary payment relief to customers affected by the Coronavirus outbreak. The following financial products are now covered:
  • Guarantor loans
  • Logbook loans
  • Home collected credit
  • Loans issued by Community Development Finance Institution
  • Credit Union Loans (only where these are regulated)

How to Request Guarantor Loan Payment Breaks

Even before the Coronavirus outbreak, if you’ve been sold a guarantor loan in the UK, you may be able to make an affordability complaint for guarantor loans compensation via Resolver. Resolver is a tool created by MoneySavingExpert that helps with guarantor loan protection for both the guarantor and the borrower and if your loan was unaffordable when it was sold, you’re due a guarantor loans refund of any interest you’ve paid (plus 8% statutory interest). Guarantor loans are notoriously offered at a higher cost interest rate offered as a last resort, where the guarantor will often pay the debt off on the borrowers’ behalf. You can argue that your guarantor loan was mis-sold to you when your lender didn’t make check your income and living expenses correctly. If you’ve found that you’ve been:
  • Struggling with living expenses
  • Borrowing to pay off a guarantor loan
  • Topping up your loan over and over again
In these circumstances, your loan may have been unaffordable meaning you have a valid dispute cause. The complaint itself won’t affect your guarantor. They shouldn’t be told that you’ve complained. You can ask for your guarantor to be removed if:
  • The loan was unaffordable for you, the borrower.
  • The guarantor couldn’t afford to repay the loan without difficulty when the loan was taken out.
  • You pressured them into becoming the guarantor
  • The lender didn’t explain the implications of being a guarantor to them
  • You had other financial links with the borrower (for example, if you share rent payments or car finance) that weren’t taken into account by the lender when affordability was assessed.
  • It wasn’t made clear to you that the loan was a top-up loan and that you would be responsible for the entire loan (not just the top-up).
If you successfully removed them as a guarantor, the loan will turn into a ‘normal’ loan. If you were unable to previously explore a Trust Deed, DAS or any other debt solution due to having a guarantor loan, this ‘normal’ loan can then be included as a creditor, without any impact to your guarantor or your guarantor’s credit rating. If you are looking to request a guarantor payment break, you should contact the company directly in the first instance. Amigo Loans Bamboo Loans George Banco Trusttwo

What is Home Collected Credit?

Also know as doorstep loans, and not to be confused with those offered illegally by loan sharks, home collected credit loans are often for small sums – between £50 and £500 – over short periods, with repayments collected weekly or fortnightly at your home. Doorstep loans tend to have a much higher interest rate than a bank loan or a credit card. All home credit lenders have to be authorised by the regulators; if not, they are acting illegally. If someone calls at your door and offers to lend you money during the Coronavirus, you should ask to see proof that they are authorised by a UK regulatory body. If they can’t provide this proof, it’s most likely that they are a loan shark or another Coronavirus scammer and you should end the conversation and report them to Trading Standards. The new Coronavirus credit payment break measures set out expectations for lenders to:
  • Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by Coronavirus
  • Allow customers negatively impacted, and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
  • Ensure overdraft customers are no worse off on price, compared to what they were charged before the recent overdraft pricing changes started
  • Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.
Trust Deed Scotland® urges anyone in financial difficulties to check their lending firm websites or social media posts for more information, and where possible use their online services to request assistance. Many lenders are experiencing a high demand in calls throughout their call centres, so it may require a push from you in many directions.  

How to Request Credit Card Payment Breaks

You should only request a credit card payment break if you really require it, and you should continue to make normal payments until your lender confirms that you have been granted a payment break. you will not automatically have interest and charges frozen during the Coronavirus outbreak. Your credit card lender may email, or even write to you to suggest how to go about claiming a credit card payment break, but we again advise that you check your lending firm(s) websites or social media posts for more information, and where possible use their online services to request assistance.

Coronavirus Debt Advice in Scotland

At Trust Deed Scotland® we understand that debt can be overwhelming.

You may be finding it difficult to cope already and with the current Covid-19 conditions, this may be causing you to worry further about how you will afford to repay your unsecured debt, don’t worry every year we help thousands of Scottish residents reach a brighter future. For qualified, expert coronavirus debt advice in Scotland, give us a call on 0141 221 0999 or complete our Trust Deed Wizard®. 

Brighthouse Administration

Posted on by Craig Stocks
The rent to own retailer Brighthouse has collapsed into administration. Caversham Finance Limited, trading as Brighthouse, is owned by private equity firm Apollo Management. The company which has stores across Scotland is synonymous with high-interest borrowing that targets the most financially vulnerable with essential household goods from washing machines, beds, sofas and televisions – in what’s known as a rent-to-own credit lending arrangement. Brighthouse had previously been branded an irresponsible lender, and their interest rates were as high as 99.9% APR on some purchases – it’s no surprise that the stores were positioned in shopping centres and high streets across Scotland, and the rest of the UK where poverty is highest and access to affordable lending at its lowest. However many debt charities and Scottish debt help companies accept that while the sight of disappearing Brighthouses from our Scottish high streets is not widely regarded as any great loss, the unfortunate reality is that they were providing a vital service for people who have no access to adequate lending facilities. Trust Deed Scotland® advised that “The business model of rent-to-own retailers and in particular Brighthouse, is damaging to Scotland’s most vulnerable people who ultimately end up paying way more than they needed to, for basic household goods.” “Using credit-risk modelling, these people are deemed to be riskier and therefore more likely to pay more than a person of reasonable creditworthiness.” “With such a vulnerable market with few options, these people simply have no choice as it was only feasible way of buying household items.” As well as concerns over Brighthouse customers, the organisation also employed many individuals in Scotland with high stores in towns and cities like Motherwell, Glenrothes, and Inverness. With many retail and hospitality organisations already struggling and fewer job vacancies opening. There are many hundreds of Brighthouse employees with a precarious financial outlook also.

Brighthouse Repossessions

The administrators have said that while there will be no new lending, all existing outstanding rent-to-own and cash loans remain subject to the original agreed terms. Brighthouse customers will continue to be chased for payment and debt in the same way. Enforcement action including the repossession of Brighthouse goods. Previously, before going into administration – If you had purchased goods from Brighthouse and fell behind on payments – Brighthouse upheld their rights to repossess their goods. No exceptions were made, be that a television or a children’s bed, the Watford-based organisation were known to be ruthless in their repossession execution strategy.  

Brighthouse Affordability Claims

While being forced to close their high street doors due to the Coronavirus restrictions, the group had been struggling for a long time, with growing refunds owed to customers who were mis-sold goods they could not afford. In theie Q2 2019/20 unaudited results, BrightHouse warned investors that the company was growing liabilities due to a high volume of customer complaints regarding excessive interest charges on cash loans and repayment interest rates. Brighthouse stated at the time: ‘We have increased the affordability provision by £5.6m as a result of an increase in the number of complaints received and we have disclosed a contingent liability in respect of our affordability provision’ Similar tougher sanctions on the likes of Brighthouse, have affected other high-interest organisations in recent years. Wonga, the payday lender being one famous example and as recent as March 2020, Peachy Loans another payday loan provider also went into administration. Amigo Loans, a guarantor loan company being another that has felt the wrath of growing criticism from regulatory bodies and consumer awareness championing. The sub-prime group once labelled as legal loan sharks by MSPs, put itself up for sale in January 2020 amidst profit warnings and turmoil created by rising customer complaints and compensation claims. Customers mis-sold Brighthouse goods from 2010-2016 were awarded £15m compensation in 2017. Brighthouse issued a refund of the interest paid, with an extra 8% interest per year added on top of that refund, and any late payments, defaults deleted. However, the Financial Ombudsman said in 2019 that it would allow complaints at any time before 2010 to also be upheld. Unfortunately, any ongoing affordability claims are usually put on hold for a longer time than usual. If you feel you were mis-sold Brighthouse goods on the grounds of affordability, we recommend that you have a look at Resolver for information on any possible mis-sold Brighthouse claims.

Brighthouse Insurance & Warranty Claims

Brighthouse’s administrator says that insurance, servicing, warranties claims will continue to be provided until further notice for essential items and smaller courier deliveries. This is subject to continuous review. If you’re considering making a claim on your Brighthouse insurance, or warranty – You should do this immediately as it too could be pulled.

Brighthouse Alternative Rent to Own Lending

If you need household goods and there is no other way, you can investigate Fairforyou. Fair for you is a community interest company that claims to challenge high cost lending and says it does this by charging its manufacturers a commission – they will charge 3.5% a month of interest representative 51.1% APR on the products that you buy from them. Again, be careful of high-interest loan rates – a loan of £1,000, taken over 52 weeks will give you £940, with a £60 fee and £586.96 of interest; meaning you pay back £1,586.96 in total. perfecthome.co.uk and payasyougofurniture.com offer services similar to Brighthouse with similar financial terms. You can consider Charity Shops such as Shelter Scotland, who offer high standard second-hand furniture goods nationwide.

I’m worried about my Brighthouse debt, what should I do?

If you’re worried about your Brighthouse agreement or any other unaffordable debts, you should seek expert debt advice. Our team of experienced debt advisers at Trust Deed Scotland® have helped over [volume] people in Scotland with their debt problems. Our tailored, non-judgemental debt advice is personalised to you and your circumstances. To get started, give us a call on 0141 221 0999 or find what Scottish debt management solutions are open to you. Try our Trust Deed Wizard® tool

Trust Deeds, Vehicles And Car Finance

Posted on by Craig Stocks
One of the most worrying aspects for anyone considering entering into a debt solution is what will happen to their assets. The fear of what may happen to their homes and cars can be one of the reasons why people put off seeking help sooner than they do. Trust Deed Scotland® always suggests that it’s best to speak to a qualified, expert debt advisor for personalised advice, as usually there is a solution that resolves anyone’s financial situation. Where an individual is most concerned that they may have to give up their car as a result of entering a statutory debt solution, reassuringly this is typically an unlikely scenario.

Can I Keep My Car In A Trust Deed?

If you need a car, you can usually keep the car during your Trust Deed term. There are many reasonable needs for a vehicle during a Trust Deed – for commute purposes or for work. Even living remotely or taking children to school counts as a reasonable need to maintain a car during a Trust Deed. This includes vans and motorbikes too. If car finance is already secured upon your vehicle under an existing arrangement, you’ll keep maintaining the payments. This is because if you fail to make the payments, the car may be repossessed by the car finance lender otherwise. When entering a Trust Deed, an allowance gets added in your monthly budget to continue paying the secured car finance, as long as your monthly finance payment isn’t deemed excessive and that you have a fair need for the vehicle.

My Car Is An Asset?

If you own a car, it is regarded as an asset. Under a Trust Deed, your Trustee take account of any assets you own and where vehicles are concerned, a £3,000 valuation threshold applies. Where your car is valued less than £3,000, there are generally no issues at all. Where your vehicle is valued at £3,000 or more, a written plan will be put in place. You will become the owner of the vehicle when you have complete your car finance term but you would also consider how much the car would be valued after a period of 4 years, the typical length of a Trust Deed term. You may also consider downgrading the vehicle before you proceed with a Trust Deed.

Car Finance Shortfall Debts?

If you had a vehicle under a credit agreement and the car was repossessed due to handing the car back early, or due to not being able to afford the finance for whatever reason, there may be a car finance shortfall debt which will then be classified as an unsecured debt. Once the car finance shortfall debt becomes an unsecured debt, the lender is then added to your list of creditors in any Debt Arrangement Scheme or Protected Trust Deed. In any instance where a car finance shortfall debt exists, the unpaid debt will be added to your Trust Deed as a creditor.

Can I Get Car Finance With A Trust Deed?

It’s a question we’re asked at Trust Deed Scotland® quite often from people considering entering a Trust Deed and the answer is yes, you can get car finance. However, entering a Trust Deed will make accessing any kind of credit quite difficult. Any new lender will usually charge you a higher rate of interest, which can then eat into your agreed disposable income. Therefore, it’s more difficult to get car finance during a Trust Deed, but not impossible. During your Trust Deed term, you will need to seek permission from your Trustee to obtain any form of credit. Not informing your Trustee breaches the terms of your agreement and could lead to your Trust Deed failing. Your Trustee will decide on whether your request to take out car finance is reasonable. The Trustee will decide if taking out a vehicle on finance is suitable for you based on your income and expenditure. Your Trustee is likely to approve your request if the car finance is sustainable with your current budget and living costs. Special consideration will be given where you require the vehicle for work purposes.

Can I Get Car Finance After My Trust Deed Has Complete?

Yes, once you have finished your Trust Deed term, you are free to rebuild your credit rating and borrow funds as you go. Once you have been discharged from your Trust Deed you will be removed from the Insolvency Register. However, the Trust Deed shall remain on your credit file for 6 years from the date you took out your Trust Deed. Therefore, if your Trust Deed lasts the standard 48 months, it will remain on your credit file for a following 24 months. This impacts your credit score, which can make it more difficult to find a suitable lender than if you had no financial discrepancies. Waiting until you have rebuilt your credit score may be a more suitable option for you when considering taking a car out on finance as you will be able to access better market rates and deals – as long you are continuing to make responsible use of credit. If this is not an option, however, you can shop around and use comparison websites to find the best poor credit car finance lender. If you are struggling to find a company willing to approve your bad credit car finance application it may be just as beneficial to approach a credit union.

I’m Worried About My Unaffordable Debt, What Should I Do?

If you’re worried about your ability to pay off your unaffordable, unsecured debts you should seek expert debt advice. Our team of debt specialists at Trust Deed Scotland® have helped over 25,000 people in Scotland with their debt problems. Our expert, non-judgemental advice is personalised to your situation. To get started, give us a call on 0141 221 0999 or find what Scottish debt management solutions are open to you. Try our Trust Deed Wizard®

Is A Trust Deed A Good Idea?

Posted on by Craig Stocks

Is A Trust Deed A Good Idea?

Trust Deeds help thousands of people in Scotland manage their unaffordable debts and reduce their monthly debt repayments to an amount that they can afford to repay on a regular basis. However, Trust Deeds aren’t a solution suitable for everyone and there are alternative debt management solutions in Scotland that can be just as effective or better. You can read more about how a Trust Deed works and the criteria within that link, or you can apply for a Trust Deed online, right now. The decision to proceed with a Trust Deed is based on you, your affordability and what is best for your long-term financial stability, rather than whether a Trust Deed is a good idea or not. Get in touch with Trust Deed Scotland® today and you’ll receive a personalised illustration.

Affordable Monthly Repayments?

The solution(s) open to you will largely depend on how much debt you have and how much you can afford to repay on a regular basis. If you have already defaulted on debts such as credit cards and loans, you may be familiar with income and expenditure guidelines, or budget sheets sent to you from your creditors. The same guidelines are largely available from debt charities and Money Helper websites. These budget sheets will ask you to write down a list of your income and expenditure details and what you usually spend on priority bills such as mortgage/rent and council tax.  These will also include what you spend on travel expenses per month, clothing and many other expenses Whatever monies are leftover is known as your disposable income. These are the funds that you have leftover to repay your debts. A debt charity service or a company such as Trust Deed Scotland® have the experience of advising on the acceptability criteria for these guidelines for these and can work with you to find out any hidden expenses that you may not take into account, and establish what your true disposable income is. This is important because if you are to enter a Trust Deed, or any other form of debt management solution, you will be making a commitment to repay a regular amount over a number of years. Where you fail to keep up the repayment of your Trust Deed, you could end up with a failed Trust Deed, ultimately leading to you being potentially sequestrated. More importantly for you, you would be no better off than when you first sought advice. This is where the experience and trustworthiness of your debt expert is important. Trust Deed Scotland® have advised over [volume] people since 2009 and have gathered thousands of five-star Trust Deed reviews on TrustPilot. We pride ourselves on our commitment to compliance and training. We genuinely want the best outcome for our clients and always have their best interests at heart.

Alternatives to a Trust Deed?

The Debt Arrangement Scheme is a popular alternative debt solution available to residents of Scotland. It’s a statutory debt repayment plan which also uses legislation to allow you to freeze interest and charges and bring your debts under control. There are advantages to the Debt Arrangement Scheme:
  • Personalised debt repayment plan based on your situation
  • Monthly payments will be based on what you can afford
  • Interest on your debt will be frozen
  • Protection against creditor action.
  • Assets protected meaning you will not be asked to sell your house, or your car.
  • Your Money advisor deals with creditors on your behalf.
There are also disadvantages of the Debt Arrangement Scheme:
  • May last longer than the typical 48 months offered by a Trust Deed.
  • Subject to certain conditions. Includes making all payments towards your Debt Payment Plan and paying your monthly expenditure and bills when they fall due. If you fail to make payments, your plan could be revoked.
  • Unable to obtain credit or use an overdraft while you are in a Debt Payment Plan.
  • Credit rating will be affected.
Depending on the severity of your situation, Sequestration may be the best way for you to resolve your debts. On the other hand, a debt consolidation loan or negotiating debt repayment plans directly with your creditors may also be better for you. Refer to our article regarding is a DAS worth it for further information on this solution.

Advantages of Trust Deeds?

There are many advantages of Trust Deeds, a few of which are:
  • Pay back what you can afford.
  • Your Trustee will deal with creditors on your behalf.
  • You will be protected against creditor action.
  • On the successful conclusion of a Trust Deed, your remaining debt will be written off.
  • If you own assets such as a property, you agree with your Trustee in advance whether the Trust Deed affects them.
  • You may be able to remain as the director of a Limited Company.

Disadvantages of Trust Deeds?

  • Your credit file will be updated to reflect that you have signed a Trust Deed. This information will remain on your credit file for six years.
  • As a result of this, you may find it difficult to get credit for a period after your Trust Deed is finalised.
  • For a Trust Deed to become protected, you must convey all your assets to your Trustee. That includes any property that you own. In certain circumstances, it may be possible to exclude your property, but you need to get clear advice on this when you speak to a debt advisor.
  • As mentioned earlier, failure to keep up with repayment of your Trust Deed could result in you being sequestrated. Therefore, it is important that you re fully aware of the Pros and Cons of a Trust Deed and that the amount you repay is realistic for all parties.

Can You Have 2 Trust Deeds?

If you have already been through the process and came out the other end then yes, you can get a Trust Deed twice. If you’re currently in a Trust Deed with a different company then you may also be able to get a second Trust Deed but there are some conditions attached. You can find out more about the process involved in our article on how to get a Trust Deed twice.

How to Get Trust Deed Advice?

If you really want to know if a Trust Deed is a good idea, seek tailored debt advice today. We’re open from 9am to 8pm during the week, and selectively during the weekends. If you do something about your debt today, you don’t need to worry about it tomorrow. Reputable debt advice companies and debt charities are regulated by governing bodies, this should help ensure that you are not ‘sold’ into a Trust Deed and that you are fully aware of the pros, cons and alternatives. Remember, a Trust Deed may not be for you, but that doesn’t mean that you are beyond help. The sooner that you seek help, the sooner you can begin to understand what options are open to you. You can also learn more a similar question of Is DAS Worth It? which investigates the Debt Arrangement Scheme in a similar fashion to the article above of the merits of whether a Trust Deed is a good idea.

What Happens When A Trust Deed Finishes?

Posted on by Craig Stocks
When your Trust Deed comes to an end, your Trustee will issue what’s known as a ‘letter of discharge’. A copy of the letter of discharge will be sent to Accountant in Bankruptcy (AiB), the regulatory body of Trust Deeds in Scotland and the Register of Insolvencies will record your Trust Deed discharge. If you enter a Trust Deed, typically you’ll finish your repayment in 48 months, as long as you made all payments in your plan. Depending on your circumstances, you may have entered into a Trust Deed for an extended period of 5-6 years. Over the term of your Trust Deed, you’ll have made a number of affordable monthly payments – and this will count as ‘full and final settlement’ of the unaffordable debts included in your Trust Deed. At the end of your Trust Deed term, any unsecured debt that you weren’t able to repay during your Trust Deed will be written off. When you are discharged from a Protected Trust Deed, you will be discharged from any outstanding debts from the people you owe money to (your creditors) that you had included at the date you registered your Trust Deed. This means that your lenders are no longer allowed to pursue money that was owed to them when you signed the Trust Deed. However, some debts won’t be written off such as a student loan, or any court fine.

What Happens With Secured Debts After A Trust Deed?

If you owe money that is secured against an asset such as property or a vehicle, it won’t be included in your Trust Deed. Your secured lenders won’t be consulted on whether they agree to your Trust Deed, and they won’t write off monies that you owe them, whether you complete your Trust Deed term or not. However, the fact that you’re in a Trust Deed should make the secured payments easier to make, as your Trust Deed payments would be calculated not to take up any monies that you need for your typical essentials – not just your rent or mortgage, but utility bills, travel expenses and so on. If you’re a homeowner, you might be required to release some equity from your property, so you can repay your unsecured lenders more of what you owe them before they write off the rest. However, you may find that the impact of your Trust Deed on your credit rating makes it harder to release equity. Mortgage providers can see that you’ve entered a Trust Deed, so you might find that it’s harder to get a new mortgage deal, or that you’re charged a higher rate of interest if you do. If you can’t release any equity then your Trust Deed could be extended by 12 months.

Trust Deed Credit Score And History Impact

Information about Protected Trust Deeds and defaults will remain on someone’s credit reports for up to six years after they occur, so they are likely to remain on someone’s credit history even after they have been discharged from their Protected Trust Deed, which normally lasts for 4 years. If you’ve already defaulted on your credit agreements even before considering a Trust Deed, this too will be logged on your credit score.

How Will A Debt Arrangement Scheme Affect My Credit Rating?

When your Debt Payment Programme (DPP) is approved, you’re placed on the DAS register. This is coordinated and managed by the DAS administrator and is available to credit rating agencies. This register, along with other insolvency registers, is added to other information to your credit report, which calculates your credit score. Just like a Trust Deed, or even a simple default notice, the Debt Arrangement Scheme will affect your credit rating for at least six years. However, this may be extended further depending on how long it takes you to pay off your Debt Arrangement Scheme in total. E.g. if you are on a DPP for under 6 years there is no difference, or if you are going to repay a DPP for longer than 6 years; your debts will not be marked as satisfied until the debt has been repaid at the end of the DPP.

What is a Default Notice?

A default notice is usually sent when you’ve missed or paid less than the full amount for three to six months. The default notice will give you at least two weeks to catch up with any missed payments. If you can do this your account will carry on as normal. If you can’t pay the missed payments in this time your account will default. Default notices only apply to debts which are regulated by the Consumer Credit Act, such as credit cards, payday loans, personal loans and store cards. You’ll know a default notice has been served on you when you receive a letter informing you of a ‘Default notice served under section 87(1) Consumer Credit Act 1974’. The most recent revision of this act was in 1983, long before the evolution of the current Trust Deed legislation and the Debt Arrangement Scheme. As the wording of the default notices is quite old, you may, therefore, be directed towards Trading Standards and/or a solicitor – remember this is somewhat outdated legislation and you are advised to instead contact a qualified debt advisor, or debt charity instead. Unless you can get a default notice removed within 2 weeks, this will be recorded on your credit profile for six years. Depending on your lenders criteria, this may have the same affect as a Trust Deed or a Debt Arrangement Scheme registered against your name.

Can You Rebuild Your Credit After a Trust Deed?

Yes, it is possible to begin to rebuild your credit rating after your Trust Deed has finished. Eventually getting a mortgage after a Protected Trust Deed is achievable. It may not always happen immediately and will require a bit of work – it is certainly possible for most people to successfully be approved for a mortgage after a Trust Deed. Also, it will not be possible to obtain a re-mortgage on a home that is still in the Trust Deed, without the Trustee’s permission, until they have discharged their interest. A Trustee’s interest in a property can continue even after the debtor is discharged. It may be that the lending terms are not as favourable as before, however by showing a commitment by making regular payments to utility bills, and by using credit sensibly, purely for the purpose of rebuilding your credit score, you will in time secure a more favourable lending rate. Paying utility bills by direct debit can help rebuild credit after a Trust Deed and even just joining the electoral roll helps prospective lenders build trust in you.

A Brighter Financial Future

Many people in Scotland have approached Trust Deed Scotland® after they’ve put off seeking help over their unaffordable debts for a number of years. So severe are some people’s financial difficulties, that if minimum payments were made only; it may take them longer than two decades to clear their outstanding debts. If you’re struggling with debts and making minimum payments to debts such as credit cards, you may regard protecting your credit score as being more important to you than dealing with the debts you have. This isn’t uncommon. However, anyone pondering the pros and cons of the impact of entering a formal debt management solution may have on their credit score after a Trust Deed finishes should look towards the long term outlook and whether it’s better to essentially press the restart button, or continue on alone waiting for a solution to present itself in another form.

Want Trust Deed Advice?

If you feel you’re struggling with debt, seek tailored debt advice today. If you do something about your debt today, you don’t need to worry about it tomorrow. As well as Trust Deeds and Debt Arrangement Scheme, there are other alternative Scottish debt solutions. Trust Deed Scotland® are able to offer no-obligation, confidential advice on all debt management methods available in Scotland. Call us on 0141 221 0999 or try our Trust Deed Wizard® tool to get started today.