What is a Trust Deed?

A Trust Deed is offered only in Scotland and is similar to the IVA (Individual Voluntary Arrangement).

It is a legally governed procedure by which you can repay your debt over a specified period of time. Monthly payments are based on what you can afford and after the period of your Trust Deed, any remaining debt is written off. ).

The Trust Deed process

The first part in the process of entering into a Trust Deed is to compile a full list of creditors (people you owe money to), how much you owe, and what you can afford to pay each month. ).

The trustee will put together a form of proposals to the lenders for approval and administer the Trust Deed. The Trust Deed may be registered as a Trust Deed. This prevents lenders from taking legal action against you and ensures that interest will be frozen on your debt. The Trust Deed is approved if two thirds of your creditors, by value of the debt, agree to it. ).

If you enter into a Trust Deed then your creditors will have the right to receive any equity that you may have in your home. However, there are ways that you can protect your property. ).

Entering into a Trust Deed means that you are entering into a contract to repay your debt, usually at a reduced rate. As such you agree during the term of the Trust Deed to: ).

• Co-operate with the trustee.
• Pay the agreed monthly contribution.
• Not take any further credit.
• Advise the trustee should you receive any unexpected windfalls or your financial circumstances change.

What are the advantages of a Trust Deed?

• The trustee handles all correspondence from creditors, therefore relieving the pressure of debt.
• A Trust Deed is usually more flexible and costs less to administer than sequestration (bankruptcy).
• With a Trust Deed, your creditors will be unable to add further interest, charges, or take any further action against you.
• You will in most cases still be able to hold certain public offices.
• You will in most cases still be able to remain self-employed and continue to serve as a director of a company.
• Trust Deeds normally last 3 years, after which any remaining debt will effectively be written off.
• Information about the Protected Trust Deed is not published unlike sequestration (bankruptcy).