What Is A Trust Deed In Scotland?


A trust deed is a legal deal between a debtor and their creditors. It's available if you live in Scotland.


You pay what you can afford for an agreed period of time. This time period four years or longer. The creditors agree to write-off the unpaid debt at the end.


A Scottish trust deeds is an insolvency process. It takes assets into account. This includes assets you own at the start. It includes assets you receive prior to your discharge. The most common assets involved are a house or vehicle.


They're described as being an alternative to bankruptcy. A trust deed might help you to clear debts sooner than using a DMP or DAS.


How Do Trust Deeds Work?


You need to obtain expert debt advice. The adviser will tell you if this option meets your needs.


The adviser will tell you the pros and cons of using a trust deed. They’ll tell you about other solutions, so that you can make an informed choice.


If you decide to go ahead, you'll need “insolvency practitioner” (IP). They set-up trust deeds and run them until discharge.


They agree the exact proposal with you. This includes your payment and whether your assets are a factor. The IP takes your payment offer to your creditors. They work to secure creditor support.


Lenders don’t have to agree to a trust deed. It’s possible that an application will be rejected.


If your proposal gets approved, it becomes a "protected trust deed". Your creditors cannot take legal action against you.


The IP manages the arrangement until your finish it.  Reviews of your money situation will happen each year. They collect your payments and deal with your creditors. The IP makes payment to your creditors.


If you complete the plan, you IP will discharge you. The trust deed debts you owed get written-off. Any debts that are not included in the trust deed will not be written-off.


Find out more at Trust-Deed.co.uk.


Pros of Protected Trust Deeds


• Avoid becoming bankrupt.

• Can help protect a home.

• Legal protection from your unsecured creditors.

• An expert deals with your creditors.

• Make a one payment for all trust deed debts.

• Unpaid debts get written-off if you complete the plan.

• Your budget allows for bills and other costs.

• May be shorter than DAS or a DMP.


Cons of Protected Trust Deeds


• Personal details on a public register.

• Your credit rating will decline.

• A home owner may need to release equity. You agree a plan to do this at the start.

• You will fall into arrears at the start. Current arrears will worsen.

• If your trust deed fails your debts will remain. You may have to pay your IP fees.

• The IP may bankrupt you if your trust deed fails.

• Some employees cannot use insolvency processes.

• Your creditors may object to the approval of your trust deed.

• You will have a restricted budget.

• Some debts don't qualify for inclusion.


Joint Trust Deeds


Joint trust deeds don't exist. If you both have debts, you can each have your own trust deed.


You can obtain joint debt advice. You can use the same IP. The experts will coordinate the trust deeds to meet your needs.


This will “feel” like a joint trust deed. It is flexible if things change for one (or both) of you.


Trust Deed Fees


The IP becomes known as the "trustee". They charge fees for their work. The trustee takes their fee from your payments.


The trustee will charge for setting-up the plan. This work includes a debt advice meeting and written advice. It includes writing the trust deed document and getting it signed by you. They send the offers to your creditors and work with them as needed.


They charge for running your plan. This includes contact with you and your creditors. They deal with creditor claims and make payments. They report to creditors and regulators. The IP handles your discharge at the end.




A protected trust deed may help you avoid bankruptcy. This is vital for some home owners and some workers.


It can resolve debt problems in a fair time period. This helps if DAS or a DMP would last for a long time.


They are a serious insolvency process. It is a legal agreement that you cannot end easily. Understand the pros and cons before you choose to go ahead.


Bright Oak is not a direct provider of trust deed services. We work with our partner, Wylie & Bisset LLP.


For further information, contact our debt experts today.


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Find out more at Trust-Deed.co.uk.

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