Trust Deeds
What is a trust deed?
Trust Deeds are legally binding voluntary arrangements, available for Scottish residents only, and can be used as an alternative to bankruptcy to clear existing debts.
A Trust Deed is designed to help those who are struggling to repay debts over ?7000, and will combine all your existing debt into one affordable monthly payment.
Trust Deeds are regulated by The Bankruptcy (Scotland) Act 1985, and are the Scottish equivalent of the IVA in England.
How does a Trust Deed work?
A licensed insolvency practitioner, known as ?the Trustee?, will negotiate with your creditors and agree an affordable monthly payment on your behalf.
A Trust deed will usually last for three years, and after the term, any existing debts will be cleared, leaving you debt free.
A Trust Deed can be registered as ?protected?, which will freeze the interest on your debts, and will prevent your creditors taking any legal action against you.
The insolvency practitioner will ensure that you keep to the terms of the Trust Deed.
The Advantages of a Trust Deed
- After the term of the Trust Deed (usually three years) any remaining debt will be written off.
- The insolvency practitioner (the Trustee) will deal with your creditors, which will in return ease the pressure of your debts.
- A protected Trust Deed will freeze any further interest on your debts.
Disadvantages of a Trust Deed
- As a Trust Deed is legally binding, if you default on the repayments, the insolvency practitioner can request for your Bankruptcy.
- A creditor does not have to accept the terms of the proposal set out by the Trustee. However, once accepted and confirmed the Trust Deed is legally binding on both parties.
- As with any debt solution, your credit rating may be affected.
Creditor
Someone you owe money to.
Unsecured lending
Total loan & credit card debts excluding your mortgage and any hire purchase.
Country
The country you currently live in.
Insolvency Practitioners
Also known as an IP, a person who specialises in formal insolvency cases.
Valuations
The process of determing the current value of an asset.
Equity
The difference between the market value of a property and the claims held against it.
Lender
Someone you owe money to.
Eviction Order
A court order by which a person may be evicted.
Arrears
An unpaid and overdue debt.
Disposable Income
The amount of income left to an individual after taxes have been paid, available for spending and saving.
Statement of Affairs
A financial report showing assets and liabilities at expected liquidation values and shareholders' equity.
Insolvent
Unable to meet debt obligations.
Secured Loan
Money borrowed using goods or property as a guarantee.