Frequently Asked Questions
What is a Trust Deed?
A Trust Deed is a legally binding agreement between you and your creditors. It is
similar to an IVA, which is not applicable under Scottish Law.
What's the difference between a Trust Deed and a Protected Trust Deed?
To gain Protected Trust Deed status, your Trustee will publish a notice in the Edinburgh
Gazette (a publication for insolvency professionals) and send all your creditors
a copy of the notice and a copy of the Trust Deed, advising them of the intention
to protect the Trust Deed. Unless written objections are received from the majority
of your creditors within 5 weeks of the notice, or from creditors representing not
less than one third of your total debts, the Trust Deed becomes protected.
What does it protect?
A Protected Trust Deed protects you from your creditors because, so long as you
maintain repayments, they are prevented from taking further action against you.
It also means your debts will cease to accrue interest. Will a Trust Deed include
all my debts? A Trust Deed will cover all your unsecured debts, including bank loans
and overdrafts, credit cards, store cards, and even mobile phone bills and gas and
electricity bills. A Trust Deed won't include any secured debts such as a mortgage
or motor finance secured on your car. Repayments on secured debts will be taken
into consideration when working out a payment plan, ensuring you'll have sufficient
funds to keep up repayments on priority debts like your mortgage.
Will my creditors stop calling and writing to me?
Yes. Your creditors will be legally bound by your Trust Deed, and once the arrangement
is confirmed, they will cease to request payments from you. Your creditors may communicate
with you via your nominated Trustee. Will interest and charges on my debts be frozen?
Yes. Once your Trust Deed is accepted, all interest and charges on debts covered
by the Trust Deed are frozen from that date. This means you will know exactly how
much you have to repay to clear your debts .
I am a home owner. Will I keep my home?
Yes. You can continue to live in your home so long as you keep up repayments on
your mortgage and any other loans secured against it. If your home is worth more
than the value of the mortgages and loans secured against it, then you will be asked
to release some or all of this equity towards your Trust Deed contributions.
I own a car. Will I be able to keep it?
Yes. If you use your car for commuting to work, then as long as it's not considered
a luxury vehicle, you will be able to keep it.
Will there be a public declaration of my Trust Deed?
No. Trust Deeds differ from bankruptcy rulings in that details are not published
in any general publication. Details of individuals currently bound by Trust Deeds
are made available only to creditors and insolvency firms, and are filed online
on a specialist website.
Will my credit rating be affected?
A Trust Deed will affect your credit rating, but it's very likely that your credit
rating will already be impaired by missed or late payments. You should not apply
for further credit while your Trust Deed remains in place.
How long will my Trust Deed last?
Most Trust Deeds remain in place for 36 months, however the exact duration depends
on individual circumstances.
What happens if I don't keep up payments under a Trust Deed?
If you fail to comply with the terms of your Trust Deed, it could result in bankruptcy.
You should contact your Trustee right away if you are unable to maintain payments.
What is a Debt Management Plan (DMP)?
A DMP is an agreement between you and your creditors that sets out affordable monthly
repayments that you should make over a set period of time to repay all outstanding
debt.
Will a DMP cover all my debts?
A DMP will cover all your unsecured debts, including bank loans and overdrafts,
credit cards, store cards, and even mobile phone bills and gas and electricity bills.
A DMP won't include any secured debts such as a mortgage or motor finance secured
on your car. Repayments on secured debts will be taken into consideration when working
out a payment plan, ensuring you'll have sufficient funds to keep up repayments
on priority debts like your mortgage.
Will my debts continue to accrue interest?
Whilst we can't guarantee to freeze interest and charges on your debt, we will do
everything we can to ensure your creditors do so. A DMP is not a legally binding
agreement so your creditors' actions are not bound by law. However, our close relationships
with a wide range of creditor organisations has helped us to freeze interest accrual
and charges in many cases.
Will my creditors stop calling and writing to me?
Once your DMP is in place, most of your creditors will deal directly with us. However,
they may still routinely contact you and send you statements. Should you feel under
any pressure, you will be able to pass any communications on to us and we will contact
your creditors on your behalf.
Why do creditors agree to DMP's?
Any positive action to address your financial situation will be appreciated by your
creditors. They will also be aware that we are responsible for looking after their
interests too.
What if a creditor won't agree to a DMP?
In the unlikely event that a creditor fails to agree to a DMP we will immediately
contact them and try to resolve the situation. Even when debts have been passed
on to a debt collection company, we are usually able to negotiate an arrangement
to suit both parties.
I'm a home owner. Will I be able to keep my home?
Yes. You can continue to live in your home so long as you keep up repayments on
your mortgage and any other loans secured against it. We will take your monthly
mortgage repayment into consideration when calculating your disposable income in
your DMP.
Can I keep my car?
Yes. If you use your car for commuting to work, then as long as it's not considered
a luxury vehicle, you will be able to keep it. Any outstanding car finance will
be included within your DMP.
What happens if my circumstances change?
A DMP is designed to be very flexible, so if your circumstances change then you
should contact us and we'll review your new financial situation. If necessary, we
will contact your creditors to renegotiate your DMP.
Will a DMP affect my credit rating?
A DMP may affect your credit rating, but it's very likely that your credit rating
will already be impaired by missed or late payments. You should not apply for further
unsecured credit while your DMP remains in place.
What is an IVA?
An IVA is a legally binding agreement between you and your creditors. It sets out
a plan by which you will repay a fixed proportion of your debt over a set period
of time.
Will all my debts be included?
An IVA will cover all your unsecured debts, including bank loans and overdrafts,
credit cards, store cards, and even mobile phone bills and gas and electricity bills.
An IVA won't include any secured debts such as a mortgage or motor finance secured
on your car. Repayments on secured debts will be taken into consideration when working
out a payment plan, ensuring you'll have sufficient funds to keep up repayments
on priority debts like your mortgage.
Will interest and charges be frozen?
Yes. Once your IVA is confirmed, all interest and charges on debts covered by the
IVA are frozen from that date. This means you will know exactly how much you have
to repay to clear your debts .
Other than my wages, will anything else be taken into consideration when calculating
how much I can afford to pay each month?
You will need to declare other earnings such as overtime and bonuses, plus you should
also declare any savings you have.
Will my creditors stop calling and writing to me?
Yes. Your creditors will be legally bound by your IVA, and once the arrangement
is confirmed, they will cease to request payments from you. Your creditors will
communicate with you via your nominated IP.
Why do creditors agree to IVA's?
An IVA gives creditors a detailed plan of what proportion of any outstanding debt
they will receive. What if a creditor won't agree to in IVA? If those creditors
who are owed at least three quarters of your debt agree to an IVA, other creditors
will become legally bound by the agreement.
I am a home owner. Will I have to sell my home?
No. You can continue to live in your home so long as you keep up repayments on your
mortgage and any other loans secured against it. If your home is worth more than
the value of the mortgages and loans secured against it, then you may be asked to
release some or all of this equity towards your IVA contributions.
Can I keep my car?
Yes. If you use your car for commuting to work, then as long as it's not considered
a luxury vehicle, you will be able to keep it.
Will there be a public declaration of my IVA?
No. You do not need to worry about friends, family or neighbours discovering you've
entered into an IVA. Details of individuals currently on an IVA are released only
to creditors and insolvency firms, and are filed on a specialist insolvency website.
Will an IVA affect my credit rating?
An IVA will affect your credit rating, but it's very likely that your credit rating
will already be impaired by missed or late payments. You should not apply for further
credit while your IVA remains in place.
How long will my IVA remain in place?
Most IVA's remain in place for 60 months, however the exact duration depends on
individual circumstances. At the end of your IVA period, all outstanding debts will
be written off by your creditors.
What happens if I don't keep up payments under an IVA?
If you fail to comply with the terms of your IVA, it could result in bankruptcy.
You should contact your IP right away if you are unable to maintain payments.
How does the bankruptcy process work?
If you want to declare yourself bankrupt you have to start the process by filing
a Bankruptcy Petition. Once the bankruptcy petition has been filed, a court date
will be set for the initial hearing to see if a Bankruptcy Order should be made.
Once a Bankruptcy Order has been made, you will be declared bankrupt.
How much does it cost to go bankrupt?
You will have to pay three different fees to go bankrupt,
- a Court Fee
- Representation fee
- the Official Receiver's Deposit
- a fee to swear the statement of affairs (not payable if the hearing is in a County
Court).
Where is the Bankruptcy Order made?
The Bankruptcy Order is made at the same court where the Bankruptcy Petition was
filed. Bankruptcy Petitions are normally filed at a county court near to where you
live and work or at the High Court.
What is the outcome of a bankruptcy hearing?
At this hearing one of the following things can happen:
- proceedings are delayed because more information is needed by the court
- the Bankruptcy Petition is dismissed
- a Bankruptcy Order is made and you are declared bankrupt.
Who deals with bankruptcy cases?
The Official Receiver is responsible for the administration of bankruptcies. The
Official Receiver usually acts as a trustee of the bankrupt's estate and is responsible
for investigating the bankrupt's financial affairs.
What do I have to do if I'm made bankrupt?
Once a Bankruptcy Order has been made, you are obliged to give the Official receiver
information about your financial affairs. This includes handing over your assets,
bank statements and insurance policies. If you are made bankrupt, you are not allowed
to obtain credit of over £500 without disclosing the fact that you are bankrupt.
What are the effects of bankruptcy?
The Trustee controls all of your assets during bankruptcy, including your home.
You won't be able to obtain credit of more than £500 without disclosing your
status and there are restrictions on your business activities. Certain public offices
are closed to you. Restrictions end when the bankruptcy is terminated after 12-months.
How will bankruptcy affect my credit rating?
The fact that you were made bankrupt will be registered with credit reference agencies
and will stay or your file for six years. After this period you might still have
to declare that you were bankrupt, especially if you apply for a mortgage.