subject: A Trust Deed And Your Credit Rating [print this page] A Scottish Trust Deed is an insolvency solution exclusively for those who reside in Scotland. It allows those who have serious debt problems and cannot afford their repayments to avoid bankruptcy. It is legally binding and during a trust deed an agreement is made between the debtor and the creditors that they owe money to, and is aimed at restructuring the payments being made, done usually because the debtor is not earning enough money to cover those payments. The repayments are reduced to a level that the debtor can actually afford based on their current earnings and outgoings. There is a certain amount of time that the repayments will be made over, which generally comes out at around 3 years, after which the debts are gone.
The question you must be asking is about credit ratings and the trust deed effect on this. It will of course be present on any credit reports, but if you are in an extreme enough situation financially to be looking seriously at a trust deed, then you have most likely already missed some repayments on your debts, which will have damaged your credit rating anyway, and more than likely would miss payments again in the future, making it worse!
Another factor you should consider is that you are ineligible, for the period that you are affected by The Trust Deed, from applying for further credit. Ignoring this rule, which is part of the agreement you would have been made aware of when taking this step, could subject you to forced bankruptcy.
However, even after the end of the agreement, the Trust Deed will still show up on your credit record for six years. This will, of course, make it difficult to get credit and where you do find it possible to obtain credit, you may find the rates are much higher given the risk to the creditor.
Yes the Trust Deed does negatively affect your credit rating, but it helps you to get rid of your debts completely and stop yourself digging even further into the hole, and it saves you from the public embarrassment and social stigma of bankruptcy.
