Usually a Trust Deed will last for 4 years and you will be asked to contribute all of your disposable income each month. This is the amount of money you have left over after paying your essential bills. However, there is also a route to enter a Trust Deed with equity only.
The equity only or lump sum Trust Deed is a Scottish debt solution where you agree to pay a lump sum towards your creditors in a full and final debt solution. The money can come from the sale of an asset, money you have in the bank or a third party contribution. If you enter
How does a Lump Sum Trust Deed Work?
When you are trying to enter an equity only trust deed in Scotland you will have to meet the criteria. The criteria includes:
- You must have at least £10,000 of unsecured debt
- You must not be able to make any payment from your disposable income. If you have disposable income then you could be asked to contribute this too.
- You must not have an asset, like a house or car which has equity which can be released.
- You must be able to contribute at least £6,000 in a lump sum payment and repay 10% of the debt after the Trust Deed company fees.
If you meet the criteria then you could put a full and final proposal to your creditors where you repay a percentage of your debt. The rest of the debt will be written off at the end of the solution.
Unlike most Trust Deeds, an equity only Trust Deed will only last for about 1 year. There would be no benefit to running the Trust Deed longer as it would incur larger fees.
Is a Lump Sum Trust Deed right for me?
If you’re still unsure if you’re suitable for a Trust Deed then you can speak to Debt Support Trust today. Debt Support Trust is a charity helping people in Scotland with their debt problems. The advice is available face to face in Glasgow or via the telephone on 0800 085 0226.
You can take the debt test below for online debt help.
A Trust Deed will impact on your credit file, whether you enter it for 1 year or 4 years. A default lasting 6 years will be added to your credit file.
If you enter an equity only Trust Deed and you have a disposable income later in the solution then you would have to contribute this money too. This would also be the same if you came into money (won the lottery or inherited money).
In the Trust Deed the insolvency practitioner will have to review whether you have any PPI and this would also be included in your solution.