Trust deeds

If you reside in Scotland and have unsecured debts which are causing you money problems, a Trust Deed could be the ideal solution. National Money offer ethical, practical advice and will put you in touch with the relevant licensed insolvency practitioner to arrange your Trust Deed plan.

What is a Trust Deed?

• A Trust Deed is a legally binding agreement between an individual who is unable to pay his or her creditors and a licensed Insolvency Practitioner (the Trustee).
• The Trustee will put together a proposal to the people you owe money to, for approval and administer the Trust Deed throughout its lifetime. This will allow you to pay as much off your debts, as you can, typically over a three-year period.
• A Trust Deed may be registered as protected, provided certain criteria are met. Once protected, all your creditors are bound by the agreement and must not contact you, similar to an IVA in the rest of the UK. This contrasts with the terms of a debt management plan where arrangements are informal, and creditors may increase their demands on the debtor at any time.
• Interest and charges will be frozen for the duration of a Protected Trust Deed much like an IVA in England.
• The process of a Trust Deed is not as formal as sequestration (bankruptcy). Although Trust Deeds are a legally binding agreement, there is no court involvement in setting up the process. Once signed, you are committed to the terms of your agreement (usually three years, but this can vary with your individual circumstances).

Advantages of a Trust Deed

• All interest and charges will be frozen.
• Pressure from creditors will be eased, as the Trustee deals with all correspondence and queries.
• A Trust Deed is usually more flexible and less costly to administer than bankruptcy.
• Trust Deeds also allow the individual to hold certain public offices, which may not be the case with bankruptcy.
• It may be possible for companies to continue trading and individuals to retain their directorships under a Trust Deed.
• Trust Deeds are not published in local newspapers but are published in the Edinburgh Gazette, which is issued on Tuesdays and Fridays.
• After you successfully complete the term of your Trust Deed, you are free from all the debts that were included in it.

Disadvantages of a Trust Deed

• A Trust Deed will not be the ideal solution for every debtor.
• All assets and liabilities have to be declared. You will be required to release any equity in your property and assets of large value will be realised.
• Entering a Trust Deed will affect your credit rating.
• You need to stick carefully to a budget for the duration of your Trust Deed and your income and expenditure will be reviewed regularly in this time.

What are the criteria for entering into a Trust Deed?

• Only individuals in Scotland can enter into a Trust Deed. You could also qualify if Scotland has been your main country of residence at any time prior to the date the Trust Deed is signed.
• There is no set amount of debt or contribution required for a Trust Deed. Each Trust Deed proposal is treated individually, based on your own unique circumstances.
• Only unsecured debts can be included in a Trust Deed (these are debts not secured against property or other assets, e.g. mortgages).

If you have any questions about whether a Trust Deed may be suitable for you or what you can and can’t put in a Trust Deed, please contact us using the number above.

Why is a Trust Deed be more suitable than other debt solutions?

For people with a large amount of unsecured debt, for whom a debt Management plan may not offer an adequate solution or bankruptcy would be too disruptive, a Trust Deed offers financial freedom within the immediate future.