What Is Life Like After A Trust Deed?

by Five Fantastic Lawyers™ on August 3, 2012

Scottish trust deeds, also known as protected trust deeds, are a form of insolvency used to help people struggling with unmanageable debts. Often seen as an alternative to sequestration, trust deeds usually last for three years and will provide a debt-free future.

Like any debt solution, a trust deed does have consequences, some of which put people off considering them as a genuine way out of debt. Although trust deeds will affect your credit score so will missed or late payments, but at least a trust deed means that you’re free from the stress of trying to manage huge debts.

Final Payments
Before you enter the trust deed, you will be told how long it is expected to last for, but more often than not it will have a three year term. This is a lengthy period but when you finally come close to the end of the agreement, you will be able to look forward to financial freedom.

Over the three years you are bound to have learned a number of lessons, including how to budget effectively and be more careful with your spending. Getting to the end of the trust deed is a huge achievement and offers you a completely clean slate, so ensure you continue the good financial practices you have been doing for the past three years.

There is quite a bit of admin and paperwork to be done at the end of the trust deed to ensure that you are discharged properly. Your IP will be responsible for calculating the monies owed to your creditors and informing you of your discharge from the trust deed. This won’t happen overnight, so be prepared to wait from anywhere between four and eight weeks.

Obtaining Credit
Although getting a loan or credit card might be the very last thing on your mind after just being released from your debts, it is unrealistic to think that you will never want credit again. In order to ensure that you are able to get access to affordable credit when you need it you should start working on re-building your credit rating as soon as possible.

You won’t be successful for many types of credit because your credit rating will have suffered during the trust deed. However, there are many credit-builder type products out there that will benefit you in the short term.

Three years after the trust deed has been completed your credit rating should be back up to a good level, provided you have kept up with any new debts, as all record of it is wiped off your credit report.

It’s important to keep on top of any new loans or overdrafts and manage them well, otherwise you could find yourself slipping into bad debt once again.

Once you’re out of your trust deed in Scotland and looking forward to a debt free future, you will need to start some financial planning. You should find yourself with extra income each month now you have no debts to pay, so put this spare cash to good use and invest in your future.

Ian is a Scottish financial adviser living in Scotland. With over 20 years experience, you’ll be sure to find detailed information to help you out of debt on the site.

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