A Trust Deed is a debt solution for people living in Scotland which has been designed to help people manage their debt by paying a single affordable payment to their creditors over a period which usually lasts four years and at the end of the agreement the remainder of their unsecured debt is written off. It is an alternative to bankruptcy, or sequestration, as it is known in Scotland and provides a way for people to clear their debts and make a fresh start.
The practicalities of a Trust Deed
This first thing required is to ascertain if a Scottish Trust Deed is the right solution for you and whether you will qualify for one. There is a whole host of information available on Scottish Trust Deeds but the best way to start off is to seek advice from a professional debt advisor.
There is a variety of debt solutions available and it is important that you select the one that is most suitable for your own particular circumstances as they are likely to be unique to you. On top of this you will find that the criteria for qualifying for different debt solutions and the legislation surrounding them, continues to change. At the time of writing there has, only recently, been some significant changes by the Scottish Government on how Trust Deeds will be operated and administered. These mostly relate to transparency and changes in the method of charging by the Trustees who administer the Trust Deed along with changes designed to create a fairer balance between the interests of debtors and creditors.
A Scottish Trust Deed is a legally binding process and must be administered by a licensed Insolvency Practitioner who would normally be appointed as the Trustee and becomes responsible for ensuring all aspects of the process are carried out according to the legal guidelines.
The next stage of the Trust Deed process is to make a proposal to your creditors which effectively sets out what you propose to repay and how much of your debt you are requesting to be written off. This is undertaken by the Insolvency Practitioner who will go through your financial circumstances and prepare the proposal from there.
If your creditors accept the proposal then the Trust Deed can be put in place. An important point at this stage is for the Trust Deed to become a Protected Trust Deed which then means that your creditors are legally bound by it and can no longer pursue you or take legal action against you. Under the recent legislation changes Trust Deeds now become protected when they are registered on the Register of Insolvencies.
Advice for homeowners
It is important to realise that if you are a home owner there are specific rules and guidelines in relation to whether or not your home can be protected or if it has to be sold. There are options for a home to be exempt from a Trust Deed and options for releasing the equity of the person entering the Trust Deed to enable the family home to be protected. This is a crucial point where you should seek advice on Trust Deeds from a professional debt advisor before starting the process.
If you abide by the rules of the trust deed for the stipulated period then you can be debt free at the end of it and make a fresh start with your finances.