by Susan Paige
A lot of people are surprised to learn that there’s actually eligibility criteria to satisfy before a Scottish Trust Deed can be applied for.
In this article we take a look at the main criteria and some of the key factors which need to be taken into account prior to putting an application forward.
- You’ll need to be a resident of Scotland.
In order to qualify for a Scottish Trust Deed then you MUST be permanently resident in Scotland. There are no exceptions to this.
- You’ll need to have debts of at least £5,000.00.
Before you can be considered for a Scottish Trust Deed you’ll have to provide documentary evidence to your Trustee that you have debts exceeding a total value of £5,000.00. This debt amount must be based on ‘individual’ and not ‘joint’ debts.
- You’ll need to have enough disposable income.
In order to have your proposal accepted, your Trustee will have to demonstrate to your creditors that you have an ability to make a set monthly repayment from your disposable income. This amount will be determined once your Trustee has given careful consideration to your income and outgoings and will take into account any financial commitments you have, such as rent or mortgage repayments. You’ll also be left with enough to live on each month, so that you can pay day-to-day expenses such as utility bills, childcare fees, travel expenses and so on. However, you should expect to budget quite tightly and make cut-backs where necessary. If your Trustee can’t propose a reasonable repayment amount to your creditors each month then your proposal could well be refused.
Other considerations …
If you’re planning to enter into a Scottish Trust Deed then there are lots of considerations which need to be taken into account and these will be discussed in more detail with your chosen Trustee.
If, for example, you own a property then you may be required to either re-mortgage or sell it in order to satisfy some of your debts. This will depend on the amount of equity in it and this will be usually be determined through a formal valuation. Some firms are now offering increased flexibility towards homeowners with equity – however, you must remember that this can easily increase the element of risk if the arrangement runs into trouble and is not a decision you should ever take lightly.
What’s more, if your disposable income is relatively high (as compared to the amount of debt you owe) then your Trustee might well suggest other debt management options, such as the Debt Arrangement Scheme.
There can be little doubt that making the decision to enter into a Scottish Trust Deed is a very serious one so it’s important to be clear on all the facts which relate to your personal circumstances before you decide to sign on the dotted line. Remember, a Scottish Trust Deed is a legally binding agreement so never be tempted to simply underestimate the seriousness of them.
So, what do you think ?