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.
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