Can You Enter A Protected Trust Deed For The Second Time?
24th October 2016
There is no restriction against using a trust deed in Scotland on more than one occasion. If you have completed a protected trust deed in the past, you have the right to use another one again in the future.
This is different to bankruptcy in Scotland. If you have already been bankrupt within the past five years, you cannot voluntarily enter sequestration again now to address your debts.
Because of the rules about bankruptcy, many people assume that the same restrictions will apply to trust deeds. Thankfully, this is not the case.
You can also enter a trust deed if you’ve previously been bankrupt or used the debt arrangement scheme (DAS).
Will Your Creditors Accept Another Trust Deed?
Creditors will generally use the same assessment criteria no matter whether it’s your first, second, or third trust deed. They provide insolvency practitioners (the trustees) with information about what they will and will not accept. Your insolvency practitioner should be able to alert you to any substantial creditor acceptance risks in advance.
There may be exceptions where a particular creditor takes a different view. This might be more common with creditors that aren’t major banks or credit card providers.
In general terms however, your creditors are making a commercial decision. They’re looking at whether they stand to receive more from your protected trust deed than they would if you became bankrupt instead. Whether or not you’ve been in a trust deed before isn’t especially relevant in this context.
Will A Trustee Take On Your New Case?
Insolvency practitioners will generally be happy to assist someone to set-up a new trust deed. The advice that they provide to you will be based the exact same criteria as it would be for anyone else.
They will want to understand the circumstances that had led to your debts building up again. This information will sometimes influence the advice that you’re given and the perceived suitability of different types of debt solutions. However, this would also be the case if you were now considering a trust deed for the very first time instead.
What If Your Last Trust Deed Failed?
Having been involved in a failed protected trust deed in the past does not mean that this option is closed to you in the future.
A trustee will want to understand why your last trust deed failed. They’ll also want to feel confident that the same situation will not arise again now.
Very often previous trust deeds have failed for unexpected reasons that the customer could not control. For example, redundancy or marital breakdown can drastically and rapidly affect the ability of an individual to maintain their payments. In this type of scenario, a trustee is likely to have an entirely open mind about you utilising the same option again now.
What If Your Last Trust Deed Has Not Ended Yet?
Occasionally people ask in our forum about setting up a new trust deed before they’ve been discharged from their last one.
This request is usually made because an individual has borrowed more money after their trust deed began. New debts from after the date that the Scottish trust deed began are not included in the existing arrangement.
It is not possible to set up a new trust deed (to deal with new debts) until you’ve been discharged from the first one.
Who Can Help?
The first step towards starting a new trust deed is to get advice. Our professionally qualified debt advisers can quickly advise you whether this option is likely to be available to you again. They can also let you know about any alternative measures that you also qualify for.
We have assisted many people to enter trust deeds in Scotland for a second time.
To get the ball rolling, please get in touch today.
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