FAQs
Here are some of the most frequently asked questions about Trust Deeds and the impact they have on your finances and your future. Do please get in touch with us if there is anything else you would like to know.
- > What is a Trust Deed (TD) and how does it work?
- > How much do I pay?
- > What are the alternatives to a TD?
- > What are the advantages of a TD?
- > Will I have to pay for this service?
- > How long will it take?
- > How long does it take to set up a TD?
- > Will my creditors continue to chase me for payment?
- > How much will I need to repay?
- > Can I keep my house?
- > Can I keep my car?
- > Is Tenon debt solutions regulated?
- > What do I have to do next?
What is a Trust Deed (TD) and how does it work?
- > A TD is an alternative to sequestration
- > It is an individual contract between you and your creditors
- > If less than a third in value or half in number of creditors object then the TD becomes protected which means creditors can take further legal action
- > Typically, you pay an agreed monthly sum for up to three years. This is divided up between your creditors, who accept the sum in settlement of the amount you owe them. In certain circumstances a TD may only be six months long
- > You pay a percentage in the pound to your creditors – the remaining balance is written off
How much do I pay?
- > The monthly payment agreed with your creditors depends on your income and expenditure – it is affordable to you and should provide your creditors with the best achievable return
- > A standing order is usually set up to pay monthly
What are the alternatives to a TD ?
- > You could declare yourself bankrupt if you have apparent insolvency or borrow more money in order to consolidate your debts
- > You could speak to a debt counsellor at your own bank or building society in order to deal with your debt problems
- > You could ask your creditors to reschedule your debts – difficult if you have a large number of creditors. Any such agreement reached is informal, not legally binding like a Trust Deed (TD)
What are the advantages of a TD?
- > You make one payment by standing order each month. That payment won’t vary during the TD unless your circumstances change and you can afford more
- > All of your creditors are legally bound by the terms of the TD if it becomes protected, as long as you keep paying your agreed monthly sum
- > When all instalments have been paid (usually after three years) you have no further obligations to your creditors. At this point you can stop paying the monthly sum
- > Your employers should not know about your TD unless you choose to tell them
Will I have to pay for this service?
- >Your monthly TD payment goes to your creditors – we agree our costs with them and they pay our fee from that payment
- > At the end of the TD your debts are satisfied in full and there is nothing further to pay
How long will it take?
- > A typical TD runs for three years
- >In certain circumstances where there is a lump sum from equity in a house a Trust Deed may last only six months
- >At the end of this period, if you have kept up monthly payments, you’ll have nothing further to pay as creditors will have agreed that your debts are discharged
How long does it take to set up an TD?
- > A TD can be signed and set up following a meeting with one of our professional advisers
- > Of course we do need you to provide any information we request promptly
Will my creditors continue to chase me for payment?
- > Upon advertisement in the Edinburgh Gazette, a letter shall be sent to all known creditors within seven days advising them of the TD.
- > If less than a third in value or half in number object to the proposals within five weeks of the TD being advertised in the Edinburgh Gazette then the TD becomes protected and all creditors are bound by the terms of the TD. Creditors should not, therefore, continue chasing you for payment.
How much will I need to repay?
- > This depends entirely upon your particular circumstances
- > A TD should provide creditors with a return which is at least as good as the return that they could expect in sequestration
- > The agreement should be your best proposal to creditors
- > A minimum dividend of 10p in the pound is required by creditors
Can I keep my house?
- > If you own your house, it is unlikely you will have to sell this as part of a TD
- > A TD will provide you with an opportunity to realise some equity for the benefit of creditors, usually by way of a re-mortgage
- > Re-mortgaging usually happens prior to the TD being signed or during the first six months of the TD
Can I keep my car?
- > If the car is required for going to and from work you can keep the vehicle. A third party will be required to purchase the vehicle at the end of the TD. The amount will be the value of the vehicle at that date. It is not the value at the start of the TD
- > If the car was purchased by an unsecured loan then the balance due on the loan would be creditor in the TD. No further payments would be paid
- > If the car is subject to a hire purchase (hp) agreement then the amount will be the value less the outstanding balance due on the hp agreement. The hp payments would be maintained during the period of the TD
Is Tenon debt solutions regulated?
- > Yes, our licensed insolvency practitioners are regulated by a number of professional bodies including the Institute of Chartered Accountants of Scotland
What do I have to do next?
- > Contact Tenon debt solutions and we will let you know whether or not a TD is a suitable option
- > If a TD is a good solution to your problems, we will contact your creditors and draft all of the documentation needed
- > If an TD is not an option we will advise you of the alternatives.