Trust Deeds - Scotland

Protected Trust Deeds - (Scotland Only)

1:    A Protected Trust Deed in Scotland is a Scottish Insolvency solution.

2:    The Scottish Trust Deed is the equivalent to the IVA used elsewhere throughout the UK.

3:    Trust Deeds are only available in Scotland.

4:    Protected Trust Deeds usually last for 4 years or 48 months but can go on for longer in certain cases.

5:    When entering a Trust Deed a person would be expected to disclose all of their income and expenditure details in order to establish a disposable income.

6:    The disposable income is the amount agreed upon which the individual will contribute on a monthly basis towards their protected trust deed.

7:    The debtor will agree to pay the creditor/s an amount each month, after 48 monthly payments the debtor would be free of the debt and any remainder owed would be written off by         the respective creditor/s.

8:    There is a meeting of creditors where the Protected Trust Deeds is proposed, the majority creditor has the right to object, their acceptance is pivotal to the Trust Deed going ahead.

9:    A Trust Deed is not always the best debt solution for people who are struggling and continue to do so.

10:   Only a licensed insolvency practitioner can manage and supervise a trust deed. A Scottish insolvency practitioner is a qualified individual who practices insolvency in Scotland.

11:   All trust deed fees and costs should be disclosed to the debtor prior to the protected trust deed proceeding and NO upfront fees should be charged to the debtor.

The Pros and Cons of a Protected Trust Deed in Scotland;

The Advantages of a Scottish Trust Deed

  • Prevent Sequestration (Scottish Bankruptcy) and further court actions with a Protected Trust Deed
  • A Trust Deed allows you to plan for an exact end date to clear personal debts.
  • Creditor calls and creditor letters are stopped by a trust deed.
  • Interest and charges are stopped during a trust deed.
  • Protected Trust Deeds are a Scottish government approved scheme.
  • Creditors cannot change their mind or renege once a trust deed is agreed / accepted.
  • A Protected Trust Deed is still possible if you have been refused loans to consolidate unsecured personal debts.

  • The Disadvantages of a Scottish Trust Deed

  • If a person entering a Trust Deed is a homeowner with equity, they may be expected to remortgage and release equity from the property in order to increase the total contribution back     to the creditor/s. This would normally happen towards the end of the trust deed process.
  • A Trust Deed will remain on a credit file for 6 years or more. People are not expected to apply for credit whilst completing a trust deed and the ability to obtain credit can be affected.
  • A trust deed is half way to Sequestration and is classed as Scottish Insolvency.
  • Any excessive expenditure will be scrutinised during the trust deed process.
  • If the person entering the trust deed owns any assets of value it would be expected that these are changed for lesser alternatives or cashed in to contribute more to the trust deed.
  • Should income increase whilst in a trust deed the debtor would be expected to increase the payments / contribution towards their Scottish insolvency arrangement.
  • Failure to maintain payments for a Trust Deed could result in Sequestration or further court action.