Lizzie is beginning to see the light at the end of the tunnel – her protected trust deed agreement is nearing its end.
After years of monthly payments, Lizzie can finally start thinking about building up her credit rating again.
It’s been a rollercoaster ride – Lizzie has had to sell her car and her mortgaged flat in Glasgow to release the equity on these assets to pay back her creditors.
There was a time when Lizzie was in serious debt, but she’s just been informed by her trustee that her last payment is upcoming and she’ll very soon be debt-free.
As it’s all coming to an end, Lizzie has started to ask herself – what happens now?
This article will provide an informative step by step guide on the trust deed discharge process. From how long the process takes, what you’ll need to look out for, and steps you can take to improve your credit score.
Step 1 – Meet the agreements of your Trust Deed
As long as you have met all of the obligations that were agreed to at the start of your trust deed, you’re in the clear. When you signed your trust deed, you agreed to make monthly repayments to your creditors in order to pay back your debt.
These monthly payments are generally paid for the next 4 years (48 months). Once this period of time is up, any remaining unsecured debts will be written off.
If you have met all the conditions of your Trust deed, your creditors cannot pursue you for any amount of money they are still owed.
Your trustee will also issue you with a ‘letter of discharge’. This will be copied and sent to the Register of Insolvencies and Accountant in Bankruptcy (AiB) who will process your discharge.
Step 2 – Wait for the Discharge to Process
In Scotland, the discharge process usually takes around one month. During this time, your creditors should have informed the credit reference agencies about your situation and changed your debt status to read ‘satisfied’.
If you’ve not been notified after a month of waiting, get in contact with your licensed insolvency practitioner for an update on your status. Once your discharge is confirmed, that’s you officially debt-free again.
Step 3 – Check you credit file has been updated
Your debt-free, ‘satisfied’ status should reflect in your credit score within 3 months of your trust deed finishing.
If any of your debts are not listed as satisfied within this time, you will need to contact your creditors and ask them to update your credit file.
The sooner your credit file has been updated, the sooner you can start rebuilding your credit rating.
Step 4 – Budget, Budget, Budget
Moving on from your experience, one of the things you’ll need to master is how to budget effectively.
It takes 6 years from the date you started your trust deed for it to no longer show on your credit file. Due to these circumstances, you may find it tricky to obtain credit for the two years after your trust deed has ended.
On top of this, you’re probably going to be offered high interest rates, so it’s really important to budget successfully after your trust deed has ended in order to pay for all your outgoings.
You may have more disposable income coming in, but your safety net of accessing further credit is rather transparent and you don’t want to find yourself falling back into any serious debt.
Step 5 – Rebuilding your Credit Score
Once the six years are up, and the trust deed has been removed from your credit file, it’s all about rebuilding your credit score.
There are a number of steps you can take to improve your credit score:
If you are applying for a credit card, choose one with as low an interest rate as possible.
If you start using a credit card, make small monthly purchases and clear them in full. This ensures you don’t start building up debt again.
Sign up to the electoral role – if you aren’t already.
Constantly check your credit score for any inaccuracies.
Refrain from taking out joint credit with anyone that has poor credit.
Space out your applications for credit. Avoid applying for lots of credit at one time.
By following the steps above, you should hopefully be left with a healthy credit rating and a knack for budgeting once your trust deed disappears from your credit file after six years.
In Scotland, the trust deed process is not the only debt solution available to you. At Scottish Debt Expert, we have a number of friendly debt advice professionals that can help you figure out the best solutions to your debt.
If you are looking for further guidance on the Scottish trust deed discharge process, please don’t hesitate to contact us.
At Scottish Debt Expert we offer help and guidance to anybody struggling with debt. Our Glasgow-based staff are always on-hand to chat through any concerns or questions you may have.
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1 According to the Annual Report from the Accountant in Bankruptcy. (https://www.aib.gov.uk/about-aib/statistics-data/aib-annual-reports-1986-present)
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