Tuesday, October 26, 2021
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Life after a Trust Deed

If you decide to enter into a Trust Deed then you won’t be surprised to learn that you’ll remain in it for a period of 4 years; during which time you’ll be expected to make monthly repayments for onward distribution to your creditors.

But what happens at the end of the arrangement and what does it mean for your financial future?  In this article we take a look at ‘life after a Trust Deed’.

What happens at the end of my 4 year arrangement?

As the end of your arrangement draws closer, it’s likely that you’ll be contacted by your trustee, who’ll explain what the administrative procedures are and what to expect.  For example, you’ll receive a formal discharge letter and your entry on the Register of Insolvencies will be removed.

If your property has been incorporated into the Deed then you might also be expected to provide a lump sum (usually raised by way of re-mortgage); otherwise your trustee will certainly remind you of any other obligations you might have entered into.

Can my creditors pursue any remaining balance?

If you’ve entered into a protected trust deed then the answer to this is a simple ‘no’.  Any remaining debt included within the Trust Deed will simply be written off and your creditors won’t be able to pursue you for it.

How will it affect my credit score?

At the end of your arrangement your trustee might advise you to check your credit score.  This can be done quite easily online.  If the arrangement is still showing as current then you can make arrangements to have it amended.  Unfortunately, details of your scottish trust deed will remain on your credit score for a period of 6 years but you need to ensure that it’s marked as ‘completed’ so that future lenders are clear as to its end date and, of course, the fact you committed to it.  If this hasn’t been achieved within 3 months of your arrangement ending then you can ask your creditors, in writing, to make the notification.

How can I rebuild my credit score?

There are a couple of things you can do to start rebuilding your credit score:

  1. You could apply for a ‘credit-builder’ credit card. Whilst these attract a much higher rate of interest than a standard credit card you can use it to show future creditors that you can now manage your finances.  You can do this by paying off your debt in full and on time each month.
  1. You could also opt in for a prepaid card and the principle is pretty much the same i.e. you use your own money to keep it topped up and ensure it stays in credit.

What else can I do to start rebuilding my finances?

Given that you’ve set a certain amount each side for the past 4 years you should use this money to start a savings account – after all, you’ll already have grown accustomed to living on a set amount each month.  You might be pleasantly surprised at how quickly your savings add up without even noticing!

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