A Change In Your Circumstances During A Trust Deed

Updated: 20th September 2016

A change in circumstances during a Scottish trust deed can be extremely worrying. This is especially the case when the changes leave you struggling to make your agreed payment. In this article we review what happens when changes of circumstances take place during trust deeds.

A typical trust deed lasts for four years or longer. It’s inevitable that, for some people, things will change which then affects their ability to make the agreed payments. Sometimes it may be a positive change, for example a promotion at work or receiving a lump sum. Often changes in circumstances make keeping up with the payments more difficult. This could be redundancy, separation, a loss of overtime, or an increase in your costs such as your mortgage payment for example.

Where circumstances improve it’s important to promptly notify your trustee. It’s likely that an increase in your trust deed payment, or being required to hand over a lump-sum that has been received, will be the outcome. Failing to inform your trustee may be a breach of the rules of your agreement and could later jeopardise the whole arrangement if it came to light. The consequences of this can be very serious.

If your change in circumstances is negative it’s just as important to communicate promptly with your trustee. They understand that things will change for some of their clients and there are therefore procedures that can be applied to help resolve the problem.
You can only pay into your Scottish trust deed the amount that is affordable, so a reduced capacity to pay should be accompanied by a reduced monthly payment. The consequences of such a reduction might include:

  1. In certain circumstances a change that is perceived to have been entirely out of your control may result in significant discretion being applied by the trustee. We have heard of cases where the trust deed provider will reduce the monthly payment without any extension to the expected term of the agreement.

  2. In other circumstances the trustee may be prepared to reduce the monthly payment but in return the term will be extended. This extension would allow the total payment originally pledged to the creditors to be collected over a longer period of time.

  3. Where the change in circumstances is dramatic it may be deemed that the trust deed is no longer a viable solution for either you or your creditors. In such circumstances one option is that you might be discharged from the trust deed with the debts still owing. You would then be free to initiate another debt procedure, such as sequestration (bankruptcy) for example.

Failing to communicate with your Scottish trust deed provider is likely to worsen the situation if your circumstances have changed. We have heard from individuals that have missed several mortgage payments, or taken out payday loans, to keep up with their trust deed payments. Such a decision will almost always be regretted later as it will simply swap one problem for a (potentially more serious) new problem in the future.

Please don’t panic if circumstances change during your trust deed. Take a step back from your worries and quickly get in touch with the office of your trustee. More often than not they’ll be able to work with you to put together a plan that will help to keep everything on a positive track.

You may also wish to visit our forum to seek some advice and support from our experts and fellow forum members.

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