Qualification Criteria For A Scottish Trust Deed
Updated: 21st September 2016
If you live in Scotland and you are worried about your debts, you may be wondering whether you qualify for a trust deed. In this article we explain some of the factors which apply. We also provide information about resources which might assist you to decide whether a protected trust deed is right for you.
Firstly, you’ll need to be currently (or very recently) resident in Scotland. You’ll need to be prepared to work closely with an adviser in order to determine whether this is the right option for you. You’ll also need to be prepared to provide certain types of documentation to enable the full process to get underway later (if this is your choice).
The technical minimum level of qualifying debt required to enter a trust deed is £5,000. If you’re a couple, each of you will need to have a minimum of £5,000 of debt individually in order to qualify. In practice it’s worth noting that different providers use their own minimum criteria to assess which cases they will choose to work on. In many instances their minimum debt threshold is likely to be somewhat higher than £5,000.
Qualifying for trust deeds also usually depends upon your ability to contribute regularly towards your debts. Scottish trust deeds are typically agreed based upon regular contributions that you fund from your income. A measurement of your capacity to pay towards your debts is made by subtracting your reasonable expenditure from your total income.
Surplus money that can affordably be paid towards your debts is often known as your “disposable income”. If you have no assets, and very little (or zero) disposable income, it’s highly unlikely that a trust deed will be an option for which you qualify. Sequestration (bankruptcy) may be a better option in these circumstances.
If your disposable income is relatively high (compared to your debt level) it might be determined that entering a trust deed is simply not necessary. In such circumstances a DAS might turn out to be more appropriate instead.
Owning certain assets can be a complicating factor when assessing whether you’re qualified to enter a trust deed. Most often the relevant asset is the equity in a house that you own, but the same concept applies to other types of significant assets also. Some firms are now offering increased flexibility towards homeowners with equity who wish to enter a trust deed. It should however be remembered that this can increase the risks you would face if your arrangement ran into trouble later.
A number of other specific criteria could be important to decide whether a trust deed is right for you, so it’s vital to get high-quality advice at the earliest stage possible. If you’d like to speak directly with one of our qualified debt advisers, please get in touch with us. You can also ask questions in our forum where a panel of experts will do their best to help you.
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