Trust Deed (Scottish Residents only)

A trust deed is a legally binding arrangement for residents of Scotland and is similar to that of IVA in England. It allows a debtor to make reduced payments over normally 4 years. At the end of this time your debts are written off. A trust deed is a form of insolvency, so your unsecured debts need to outweigh the value of your assets, such as a house or vehicles. Unsecured debts include things like credit card debt, personal loans and store cards.

With the help of an Insolvency Practitioner (IP) you make an affordable repayment to your creditors over a 4 year period. At the end of this time any remaining debt you have is written off. You can’t set up a trust deed without an IP (they are known as your ‘trustee’). The IP acts on your behalf to draw up a proposal and holds a creditors meeting to get the proposal accepted. They will also help and support you throughout the arrangement.

If your creditors agree to this repayment amount your trust deed becomes ‘protected’. This means they won’t chase you for payment or add any more interest and charges to your debts, and they can’t take any court action. An IP will normally take a charge for their service out of your monthly repayment, so it’s important to shop around and find the best one for you.

Who may be suitable?

• Lives in Scotland
• Unable to meet their contractual payments
• Have an available offer of repayment from income and or assets.
• 2 or more lines of debt
• Informal Debt Repayment Term – Over 4 years

Risk and considerations:

• Failure to maintain repayments under the terms of your credit agreements or hire agreements may result in the loss of services or assets and may have a severe effect on your future credit rating.
• Failure to continue to pay taxes, fines, child support payments and other certain debts could result in the loss of access to essential goods or services, or repossession of, or eviction from your home.
• If the arrangement or deed fails there is a risk of sequestration.
• Homeowners may be required to release equity from the value of their homes to pay off debts and remortgages may attract higher interest rates as a result of the arrangement.
• There are expenditure restrictions placed on a person who is entering into a trust deed.
• Only debts included in the Arrangement will be discharged on successful completion and all debts not included will remain outstanding. (Please refer to your schedule of creditors for debts included in this arrangement).

Find out more about:

Trust Deed Advantages and Disadvantages