If you own your car, it’s considered to be an asset. Trust deeds in Scotland take account of the assets you own and (in some cases) this can result in an extra liability for an payment.
A £3000 valuation threshold is applied to vehicles. A vehicle worth less than £3000 (that you reasonably need to keep) won’t lead to any extra payment liability. For cars worth more than £3000, a written plan is put in place which determines how that asset will be “realised” for the benefit of your creditors. Options to realise your asset might include:
• Extra monthly payments (at the end of your trust deed)
• A one-off payment from a third party (often a relative)
• Downgrading the vehicle before you start the trust deed
The asset threshold does not apply if you don’t own your car, van, or motorbike. This might apply if you’ve borrowed a vehicle from a family member or friend (and they can prove ownership) for example. You are also not the legal owner of your vehicle if it’s subject to a:
• Hire purchase agreement
• Conditional sale agreement
• Lease agreement
You may become the owner of a financed vehicle in the future if it becomes yours once you have fully repaid the finance. If you haven’t yet completed your trust deed, the £3000 valuation threshold would then apply to this vehicle. If it’s worth more than £3000 an extra payment may become due. This payment can be achieved using the same options mentioned above.