Joint Trust Deeds in Scotland

You do not need joint debts to start a Scottish trust deed together. If you each have separate debts, this joint debt solution is available.

Your financial affairs must be linked to each other. For example, you’ll probably live in the same home and share bills and expenses. You each need to meet the individual qualification criteria. These criteria include:

• Being resident in Scotland

• Owing at least £5,000

• Being able to afford a regular payment

Joint debts get included in protected trust deeds. If you have a £2,000 joint loan, it counts as £2,000 each for your minimum debt level of £5,000.

You’re required to pay your disposable income into a trust deed in Scotland. This is worked out individually. If one of you earns more than the other, their monthly payment will usually be higher. The lower earner is likely to pay less each month.

Trustees cannot accept payment funded by benefit income. Payment must come from private income, like employment or a private pension. If one of you only gets benefits (or has zero income) they may require a different debt solution.

Creditors can object to joint Scottish trust deeds becoming protected. They use criteria to assess whether they’ll accept or reject your proposals. Your proposals are separate, so it’s possible one could get accepted and the other rejected.

Your adviser should warn you if there’s a risk of rejection. If rejection actually occurs, you’ll need to deal with your debts another way. The other (accepted) proposal continues as planned.

You are free to act jointly or individually. It makes no difference whether you’re married, in a civil partnership, or co-habiting. Acting jointly may feel convenient, but it won’t always produce the best outcome. Partners may get advised to each start a different debt solution.

A joint trust deed might not be suitable if one of you:

• Owes much more than the other

• Can afford to pay their own debts

• Earns much more than the other

• Expects a major change to their financial situation

• Isn’t technically insolvent

• Owns significant property or other assets

• Suffers from debt-related stress or ill-health

• Receives zero income (or just benefit income)

• Has personal insolvency employment restrictions

• Is close to retirement

• Expects to receive a lump sum

• Must maintain a good credit rating

Your adviser will consider such issues when advising you. Your household finances may recover faster by each choosing different debt solutions.

One (or both) of you may be better suited to the debt arrangement scheme. DAS enables you to repay your debts in full, with legal protection, and without interest. This may be a quicker and/or less damaging way to clear your debts. A debt payment programme (under DAS) takes no account of the assets you own. This debt solution isn’t insolvency and can be used jointly.

One (or both) of you might choose a debt management plan. You can repay your debts fully, but without legal protection from creditors. There’s no guarantee that interest will stop (though it often does). A DMP is not insolvency and can be used jointly. It takes no account of the assets you own.

One (or both) of you may be better suited to bankruptcy. This option does not require a monthly payment, so could be suitable for non-earners. Joint bankruptcy doesn’t exist, but the process can be coordinated (like a joint trust deed). Assets (like your home or car) get taken into account, so care is required.

It’s common for couples to each enter a different debt solution. It can produce a better outcome, individually and as a couple.

If you separate or divorce, your trust deeds should get reviewed. Moving from one household to two households is likely to increase your bills. It may be hard to stick to your agreed payment amount. Reduced payment may be acceptable, but this could lead to an extension. If no payment is affordable, there’s a risk that your trust deed could fail. You’d then need to identify a different way to address the debts.

If you can both still manage the agreed payment, your arrangements simply continue. They’d be handled separately from this point.

Please get in touch if you’re worried about your debts. Our expert advisers provide friendly and confidential debt help. We’ve helped many couples to enter protected trust deeds together. We’ve also helped partners start separate solutions when appropriate.