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What is a Scottish Trust Deed?

A Protected Trust Deed in Scotland is a formal, legally binding arrangement between an individual and their creditors which lasts for a period of 4 years although a longer period can be considered. It is a legal agreement which can only be carried out through a licensed Insolvency Practitioner (IP) who will act as the Trustee. It is only available to residents of Scotland and is designed to help individuals who are unable to repay their debts (more than £5,000). At the end of the period any remaining debt is written off by creditors, subject to some exceptions. Another option available to Scottish residents is a DAS (Debt Arrangement Scheme) which freezes interest on your debts and protects your home and car. If you are based in England or Wales an IVA may be suitable alternative.

A Scottish Trust Deed reduces unaffordable multiple payments to creditors to a single affordable monthly payment to the Trustee. It offers protection from creditors taking legal action against you, and protects your home and car from repossession.

If you would like free, confidential and impartial advice about entering a Trust Deed without any obligation please contact, Scotland’s Leading Trust Deed Company.

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In this guide

How does a Scottish Trust Deed work?

Step One

Consult an Insolvency Practitioner who will act as your Trustee if you decide to proceed. He will sit down with you and discuss your personal financial circumstances. This enables him to help you to draw up a realistic budget and to determine the level of affordable monthly payment you can make towards your debt.

This single monthly payment will replace all your other monthly repayments to existing creditors. This forms the basis of the Trust Deed which will be submitted for approval to creditors. It is an important step towards securing you protection from creditor action, from other forms of legal action or from your wages being arrested.

If you are unable to afford the minimum monthly payment for a Trust Deed, Bankruptcy (called Sequestration in Scotland) is often a good alternative. To find out if a Trust Deed might be an affordable solution for you try our Debt Calculator. It will return minimum monthly payments for different solutions based on your debt level. We request your contact details as these results are only indicative, and a full income and expenditure is necessary to provide best advice.

Step Two

Once a Trust Deed is signed, your Trustee will send a proposal to your creditors, clearly detailing how much you propose to pay, how your assets, if any, will be dealt with and how much creditors can expect to receive over the lifetime of the Trust Deed.

Creditors have five weeks from the publication of a Notice in the Register of Insolvencies to either accept or object to the proposal. If no objections or objections which are not a majority in number or are less than one third in value of the debt are received, the Trust Deed achieves protected status. If sufficient objections are received then the Trust Deed will fail. If this were to happen your Trustee would resign and you would be given further advice.

If your creditors do not respond it is considered that they have agreed to the proposal.

Step Three

Once your Trust Deed is protected your creditors are unable to take action against you to recover your debts.

If you are a homeowner, the level of equity, which is the difference between the value of your home and the amount you owe to the secured lender, is determined at the start of the Trust Deed. If you have a lot of equity in your home, it must be released to your Trustee to pay to your creditors. Your advisor will discuss with you the different ways to release your equity before you sign your Trust Deed. Every situation is different but it is highly unlikely that you will be forced by your Trustee to sell your property.

Step Four

Once all payments have been made, normally over a period of 4 years, and all terms have been met, you will be issued with a discharge letter confirming this position. Your creditors who were included in the Trust Deed cannot pursue you for the balance of any amount still due to them.

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Advantages

  • Payments are based on your circumstances and what you can reasonably afford to pay.
  • Your Trustee will contact your creditors, which will remove the pressure of unwanted phone-calls and letters.
  • All administration is dealt with by the Insolvency Practitioner.
  • Once the Trust Deed has become “Protected” creditors cannot take legal action to recover their debts and are bound by the terms of the Trust Deed.
  • It allows you to regain control of your finances
  • All costs are met from your monthly contribution payments which you make into a bank account held in trust for creditors. The Trustees fees and expenses are agreed between him and your creditors and are deducted from your monthly contribution payment and, if appropriate, from the sale of any assets.
  • At the end of the Trust Deed, normally a period of 4 years the balance of the debts included I your Trust Deed will be written off.

Disadvantages

  • If you are a homeowner and have equity in your home this must be released to pay to your creditors. There are ways to do this without the need to sell your home, for example by re-mortgaging or by a third party or family member making payments on your behalf. Alternatively it may be possible to extend your monthly contribution payments at the end of the Trust Deed.
  • Creditors can vote against a Trust Deed becoming “Protected”.
  • There are certain professional bodies which prevent members from signing a Trust Deed.
  • You may find it difficult to obtain credit in the future. Credit reference agencies will assess the level of risk based your on financial history which may include the Trust Deed.

Why choose Carrington Dean to help with a Scottish Trust Deed?

  • We are experts in this field and well-established as Scotland’s leading Trust Deed company. Our friendly team welcomes new enquiries from people who either need help with their financial difficulties or wish to learn more about Trust Deeds.
  • Once your Trust Deed is protected your creditors can no longer take action against you. 99% of our Trust Deeds achieve protected status.
  • We also have excellent client feedback which you can read on Feefo.
  • If you would like free, confidential and impartial advice about entering a Trust Deed, we would be pleased to meet with you or talk to you on the telephone. We are based in the heart of Glasgow and would be happy to make an appointment at a time that suits you.

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Frequently Asked Questions

A Trust Deed is only available to individuals who are residents of Scotland, and have lived in Scotland for at least six months prior to their application. If you are based in England or Wales an IVA may be an appropriate alternative.

Trust Deeds, as with all forms of debt solutions, are specific to an individual’s circumstances. The choice of appropriate solution is based on numerous considerations – please contact us for more information – or try our debt calculator.

A Trust Deed may be an ideal solution if you have unsecured debts of more than £8,000. Unsecured debts include bank loans and overdrafts, store and credit cards, credit union and payday loans.  Mortgages, secured loans or hire purchase debt cannot be included as the debt is secured against the asset.

No. A Trust Deed is a private and confidential matter between an individual, their Trustee and their creditors. However, before entering any debt solution please check your contract of employment as you may be in breach of your contract if you enter into a Trust Deed.

Your Trustee will deal directly with your creditors. This will remove the stress of telephone calls and letters. Once your Trust Deed is protected calls and letters should stop. However, if any of your creditors continue to contact you, you can refer them to your Trustee who will handle the matter on your behalf.

If you are a homeowner, the level of equity, which is the difference between the value of your home and the amount you owe to the secured lender, is determined at the start of the Trust Deed. If you have a lot of equity in your home, it must be released to your Trustee to pay to your creditors. Your advisor will discuss with you the different ways to release your equity before you sign your Trust Deed. Every situation is different but it is highly unlikely that you will be forced by your Trustee to sell your property.

A Trust Deed is a legally binding contract which you cannot cancel once it has been signed. It is extremely important that you fully understand all the terms and conditions of your Trust Deed before entering into it. If you have any questions please do not hesitate to contact an adviser for more information on 0141 221 2323.

Once all the relevant information is collected, and due consideration given, a Trust Deed can be set up immediately.

We do not charge for advice and we do not charge if your Trust Deed proposal is rejected by your creditors. Your Trustee’s fees are paid from the monthly contribution payment which you make. The balance will be paid to your creditors.

Immediately following the signing of the Trust Deed, your Trustee will place a Notice in the Register of Insolvencies by the Accountant in Bankruptcy. Your creditors have five weeks from the date of publication of this Notice to either accept or object to the Trust Deed.
A Trust Deed becomes protected unless your Trustee receives written objections which are not a majority in number or are less than one third in value of your debts.
Once the Trust Deed becomes Protected, it is recorded in the Register of Insolvencies and no creditors are allowed to take any further action against you.

If sufficient of your creditors object to your Trust Deed becoming protected there are other available debt solutions.

No. A Trust Deed must be arranged by a licensed Insolvency Practitioner. Iain Forsyth, James Macintyre, Peter Dean and Maureen Roxburgh all act as Insolvency Practitioners as part of Carrington Dean.

If you are unhappy with your Trustee it is very important that you talk to them. Your Trustee is the person who will decide whether or not you have met your obligations and whether you will be discharged from your debts.
All Trustees are members of an approved governing body. Your Trustee will give you details of their governing body and you can contact them if you are unhappy with the way your Trustee has dealt with your Trust Deed. Please refer to the useful links section for details of the governing bodies in the UK.

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