Trust Deed in depth


Trust Deed Explained

A Trust Deed is Government legislation that is designed to help Scottish resident’s clear debt. it is a legally binding arrangement between you and your creditors where you agree to repay a percentage of your total debts based on what you can realistically afford over a period of 36 months. The remainder of this debt will then be written off and you will be free from debt.

A Trust Deed differs from many other financial solutions in that it can be much more flexible and affordable while at the same time providing protection from your creditors.

To enter into a Trust Deed you will need the help of a licensed insolvency Practitioner who will assist you with the preparation work. This person will be known as the “Trustee”. The Trustee will go through all details with you prior to signing the Trust Deed and then proceed to liaise with your creditors on your behalf. Later, in the case of the Trust Deed becoming protected, the Trustee will distribute contributions to your creditors and administer your Trust Deed.

The arrangement usually lasts for a period of 36 months in which you have agreed to a monthly payment schedule based on what you can actually afford. Once this has been agreed all documentation is drawn up and sent to you for signing. The Trustee will then place a notice and your creditors will have 5 weeks to respond with their decision. The Trust Deed will then become protected if less than one third of your creditors submit a written rejection against it.

If you have debts over £10,000 and are currently struggling to meet your repayments, a Trust Deed could be available to you

Trust deeds in general

Can I ask anyone to be my trustee?

No. You must ask a qualified and registered insolvency practitioner. You cannot ask the Accountant in Bankruptcy.

Does a trust deed stop my creditors taking action against me?

Only if it becomes a protected trust deed. If it is not protected, only creditors who agree to it are bound by it. Those who object to it can still take legal action against you. They can even ask the court to make you bankrupt. The only way to stop all your creditors taking legal action is to have the trust deed protected.

Who pays for a trust deed?

All the trust deed costs have to be paid out of the assets you transfer to your trustee and/or from money you pay as a contribution. But you will need to be in a job to sign a trust deed.

How much do I need to owe before I can sign a trust deed?

It doesn’t matter. There is no set amount of debt needed to sign a trust deed.

Are trust deed terms laid down in law?

No. A trust deed can contain any terms you think your creditors will accept. You can sign one which only transfers some of what you own. But such a trust deed cannot become a protected trust deed and your creditors are likely to object to it. i~ you want a protected trust deed, you must transfer all you own except household items. There is a standard deed used for protected trust deeds.

After I sign a trust deed, what more do I have to do for my trustee and creditors?

You must co-operate with your trustee and keep to the terms of the trust deed. They may require you to pay some of what you earn. They will deal with your creditors.

Are there any other consequences of signing a trust deed?

If you sign a trust deed, it allows a creditor (or creditors) who you owe at least £1500 to petition for your sequestration in the 5-week period before it becomes protected. If those creditors write and tell your trustee that they object, they have an extra week to send their petition to court.