PayPlan Scotland speak to hundreds of clients in Trust Deeds every day. Some questions come up time and time again, so the team at PayPlan Scotland have put together a list of the Top 10 things they get asked about Trust Deeds by clients – and the answers!
1. What happens if I come into some money during my Trust Deed?
If you receive any ‘windfalls’ of money during your Trust Deed – for example a lottery win or inheritance – you will have to pay this into your Trust Deed. This is because ‘windfalls’ of money are seen as an asset by your creditors, and the funds will be used to increase the amount paid to them.
If your ‘windfall’ amount is enough to cover 100% of your total debts (plus any fees and statutory interest), you will have to repay everything in full, and any remaining funds will be returned to you once your Trust Deed is fully paid and completed.
2. Can I borrow money whilst I’m in a Trust Deed?
When you’re in a Trust Deed, it is advisable not to take out any further credit. And anyway, as your credit rating is adversely affected, you’ll probably find it difficult to take out any further borrowing until after your Trust Deed has been successfully completed.
In some circumstances, you may find you do need to borrow money during your Trust Deed – please always discuss this with us before taking out the credit. Any credit you take out during your Trust Deed will probably come with a high interest rate, which is likely to mean high monthly repayments.
It’s important to note that any credit you take out after you’ve signed your Trust Deed won’t be included in your debt plan, so you will need to make the monthly repayments yourself.
Remember that if you fall behind with your repayments on any borrowing taken out during your Trust Deed, the lenders are fully within their rights to add fees & charges, and pursue legal action against you to recover the debt.
3. What happens after I complete my Trust Deed?
Once you’ve made all your agreed monthly Trust Deed payments, your Trustee will apply for your discharge from the Trust Deed – as long as you have met all your obligations as set out in your Trust Deed proposal.
This discharge stipulates that your creditors must write off your outstanding debt to them, and they can’t pursue you in the future for any of the debts included in your Trust Deed.
4. Why do I have to pay any additional income into my Trust Deed?
All Trust Deeds have an ‘overtime, bonus and commission’ clause in place, stipulating that additional income needs to be paid into your Trust Deed for the benefit of your creditors.
Some Trustees may require you to pay 100% of any additional income into your Trust Deed.
With PayPlan, if your additional income is equivalent to no more than 10% of your normal monthly income, you can keep it all, as you won’t have to pay any of it into your Trust Deed. If your additional income is equivalent to more than 10% of your normal monthly income, you will only have to pay half of the amount that falls over the 10% limit into your Trust Deed.
This policy allows you to benefit from the extra work you’ve done, whilst also ensuring that your creditors get a share of your additional income to go towards repaying your debts.
5. How does being in a Trust Deed affect my credit file?
As a Trust Deed is a personal insolvency plan, it will show on your credit file for 6 years from the date that you sign your Trust Deed proposal.
If you receive any default notices after this date, they can be backdated to the date you sign the proposal, so your credit rating is affected for no longer than the original 6 years.
6. What happens if I have a change in circumstances during my Trust Deed?
Your Trustee will complete a yearly review with you to check that your personal details and income & expenditure details are up-to-date, and make amends if necessary.
However, if your circumstances change in between reviews, we can complete an income & expenditure review with you at any time.
By doing this, we can make sure that your agreed monthly Trust Deed payments are still affordable, and propose changes to your creditors if needed. All we need you to do is contact us as soon as you become aware of any changes, so we can review everything with you straightaway.
7. What should I do if my creditors contact me during my Trust Deed?
If any of creditors included in your Trust Deed make contact with you to chase payments, tell them you are in a Protected Trust Deed with PayPlan Scotland.
Let them know the date you signed your Trust Deed proposal, and advise them to contact PayPlan Scotland with any future enquiries.
Feel free to tell them our phone number and your Case Reference Number.
8. What should I do if I can’t afford my monthly Trust Deed payment?
If you’re having trouble making your agreed monthly Trust Deed payment, contact us immediately to let us know. The sooner you let us know about this, the sooner we’ll be able to discuss a solution with you.
If you miss a payment without giving us prior notice, you will be in breach of your Trust Deed arrangement.
We will contact you urgently to chase the payment – and to ask why you have missed it – so that we can keep your creditors informed of the situation. This is important because any breaches in the arrangement could ultimately lead to the failure of your Trust Deed.
9. What happens if I lose my job while I’m in a Trust Deed?
As every situation is different, we always suggest you contact us immediately so we can discuss the next steps with you.
One of the options could be a payment break – putting a halt to your monthly Trust Deed payments until you have found new employment.
We appreciate this might be a difficult time for you, and we will always work hard to find the best solution for your particular circumstances.
10. Will you provide my creditors with an update on my Trust Deed?
Yes. At each anniversary of the start of your Trust Deed, we will send all your creditors a report of what has happened with your Trust Deed in the previous 12 months.
This will include details of any changes in payments, any missed or additional payments, and what dividend (payment) your creditors are due to receive.
If any of your creditors have queries at any other time, they can always contact us for an update.
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