Do you Have to be Employed to Enter a Trust Deed

14th September 2011

One of the questions that often appears on our Scottish trust deed forum is ‘what types of income count for the calculation of a trust deed contribution?’ The root of the question tends to be that many people who want a trust deed have a combination of different income sources that might include pay from employment, self-employed income, bonuses, overtime, commission, second jobs, benefits income or pension payments.

The answer to this trust deed question is almost always that each type of income will be added together and, from this, reasonable expenditure will be deducted. The surplus income that exists will then be used to fund the trust deed.

Of course not everyone in need of a trust deed is in paid employment or self-employed. Must you be employed in one way or another to start a trust deed?

It isn’t considered acceptable to enter a trust deed if you rely on benefit income alone. The nature of benefits is that they are set at a level that is calculated to cover the needs of the recipient. No surplus is built into such payments to facilitate the repayment of debts or to contribute to debt solutions such as a trust deed.

If you currently rely on benefits income alone and do not anticipate that this situation will change in the near future it will be sensible to look to different options, other than getting a trust deed, to deal with debts that are no longer affordable. Primarily this may involve sequestration which is also known as bankruptcy. A potential “route” may be the LILA “low income low assets” criteria. However, anyone with significant assets will have to consider another route to bankruptcy and also whether they are prepared for such assets to be put in jeopardy before taking this path.

How about if you currently live from pension income alone and want to get a trust deed? Well,if your sole source of income is the state pension a trust deed will not be an appropriate option. The same logic that applies to sole reliance on benefits income applies.

If you are also in receipt of private pension income the situation may differ. Your private and state pension income levels will be added together and your essential expenditure deducted. If a sufficient surplus of disposable income exists a trust deed may become an available option.

What if you are a homemaker relying on the income of your partner or spouse? It’s intended that a trust deed would be funded based upon your personal circumstances, albeit in the context of you paying your fair share of household expenditure.As such if your partner or spouse is in employment but you are not it’s very unlikely that a trust deed would be available to you unless the scenario changed.

Of course everybody has unique circumstances and needs. Therefore decisions related to trust deed availability or suitability should only be taken after taking qualified individual debt advice from an appropriate advice source.

For expert advice about your personal financial situation Trust-Deed.co.uk can help. Our website includes all the information you need to learn how and why to get a trust deed, as well as whether you are an acceptable candidate for a trust deed. Our online forum is a fantastic resource where you can talk to finance and trust deed experts as well as other trust deed seekers.
Meanwhile our advice line is manned by a team of professionally-qualified debt and trust deed advisors who are here to help with all your enquiries. Browse our website or call now on 0800 043 7201.

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