What are Trust Deeds?
A trust deed is a legally binding financial agreement between a person and their creditors. Similar in scope and terms to IVAs in England, Wales and Northern Ireland, trust deeds are only available to people living in Scotland. Designed to help people struggling with debt, trust deeds are a way of allowing people with debts of more than £8,000 to come to a repayment agreement with their creditors. Just like an IVA, a Scottish trust deed involves your financial situation being assessed by a licensed Insolvency Practitioner who serves as a Trustee of your debt and whom will act as an intermediate between you and your creditors. In general, a trust deed is available to anyone who is currently living in Scotland or who has lived there in the previous 12 months running up to the time an application is made.
Is a Trust Deed my best option?
Trust deeds are the best option for many as they are legally binding with your creditors and debt is usually cleared within 5-6 years. Assets can be kept and a payment structure is made that suits your situation. However a trust deed can be very strict and needs to be kept to. If it fails then there is a risk of bankruptcy. Certain professions can also be affected by insolvency, so check your contract of employment before going forward with a trust deed. Whether you’re accepted onto an trust deed or whether other options such as Debt Relief Orders (DRO) or Bankruptcy are better options, depends on certain criteria. Complete our quick online assessment to see which is best for you.Take our quick online test
What is Involved in a Trust Deed?
Whilst the majority of trust deeds last for approximately 4 years, your debt and personal circumstances will be taken into account, and therefore longer repayment periods are possible. Once all your debts and financial incomings and outgoings are calculated, the Insolvency Practitioner in charge of your case will suggest how much you can afford to repay each month. Whilst the process is designed to help your creditors get some of the money back you owe them, your needs will also be taken into account and therefore the suggested monthly amount will always be only what it is calculated you can afford to repay whilst still retaining a certain standard of living.
Although entering and agreeing to the process is entirely voluntary, once it is agreed to by all parties involved it becomes legally binding. As such, you will be required to adhere to the agreement for the period stated or face the risk of further penalties, such as your creditors pursuing bankruptcy against you. Once the agreed time period is over, any remaining debt is written off; although there can be exceptions to this. Whilst still requiring you to repay as much of your debt as possible, your home and other assets, such as a car, will be protected from repossession. Furthermore, your debt repayments will be consolidated into one simple monthly repayment and those you owe money to will be unable to contact you. Trust deeds have been created specifically for people living in Scotland and are therefore not available for people living in other areas of the UK.