Trust Deed (Scotland)
A Trust Deed is a formal debt solution available to residents of Scotland. It enables eligible individuals who are struggling to repay serious levels of unsecured debt to regain control of their finances.
What is a Trust Deed?
Trust Deeds provide a viable alternative to sequestration, which is the Scottish term for bankruptcy. They enable you to make affordable repayments to your unsecured creditors, with any debt remaining at the end of the term being written off.
They typically last four or five years and are overseen by a licensed insolvency practitioner (IP). If you are a homeowner and have equity in your property, you may be required to remortgage so that creditors receive a higher return.
Who is eligible for a Trust Deed?
- You must be a resident of Scotland – if you live in England, Wales, or Ireland, you may qualify for an Individual Voluntary Arrangement (IVA), which is similar in nature to a Scottish Trust Deed.
- You must have unmanageable unsecured debt, typically £5,000 or more, which you are unlikely to be able to repay in a reasonable period of time
- You need to have a regular income so that you can meet the monthly repayments
Which debts can be included in a Trust Deed?
Trust Deeds are intended to deal with unsecured debt. This type of debt includes but is not limited to:
The Trust Deed process
A licensed IP assesses your financial position to establish your eligibility for a Trust Deed, and also to ensure that it is the most appropriate debt solution for you. A proposal is put forward to your creditors for an affordable monthly repayment amount. On approval, the Trust Deed becomes ‘protected’ and is legally binding on all parties.
Interest and charges on your debts are frozen, and creditors are not allowed to contact you regarding their debt. Your Trustee administers the Trust Deed throughout the process, receiving payments and distributing them to creditors according to the agreement.
How could a Trust Deed affect you?
- A Trust Deed helps you to escape unmanageable debt and start afresh financially after a fixed period of time
- Although you may need to remortgage your home towards the end of the term, it is unlikely that your home will need to be sold
- You no longer need to deal with letters and phone calls from creditors
- Trust Deeds remain on your credit file for six years, which will negatively affect your ability to borrow for this period of time, and potentially in the future
- Your job may be at risk as some employers do not allow members of staff to become insolvent
If you would like more information on Scottish Trust Deeds and how they can help you to escape debt, call one of our licensed insolvency practitioners to arrange a free initial consultation.
Find out more