Scottish Trust Deeds
A Scottish Trust Deed is a formal arrangement based on a proposal by a debtor to his creditors to clear his debt.
Scottish Trust Deeds are only used in Scotland, and are the Scottish equivalent to an Individual Voluntary Arrangement (IVA). They are regulated by The Bankruptcy (Scotland) Act 1985.
Scottish Trust Deeds provide debtors with an alternative to sequestration.
How Scottish Trust Deeds Work
Scottish Trust Deeds are only relevant to debtors that do not have enough disposable income to meet their debt repayments.
Typically, Scottish Trust Deeds consolidate all of the debtors' unsecured debts into one affordable monthly repayment schedule over 36 months. This repayment figure is based on what the debtor can realistically afford to pay. As such it takes into account the debtor's income, living expenses, assets and liabilities and a certain amount of the debt is written off completely.
In other words, the re-payment figure proposed in a Scottish Trust Deed is lower than the debt owed and if the creditors accept it, it would be in full and final settlement.
Creditors vote on whether or not to accept the Scottish Trust Deed being proposed. Once they have agreed to accept it, the Scottish Trust Deed becomes a legally binding agreement and the interest on the debt stops accruing.
The debt is deemed to have been cleared and outstanding debts are written off once the Scottish Trust Deed has been completed.
Not sure if a Scottish Trust Deed is right for you? Please click here to contact an independent debt counselor for free advice.
How to Set Up Scottish Trust Deeds
In order to set up a Scottish Trust Deed you need a licensed Insolvency Practitioner to draft the initial proposal to your creditors.
The Insolvency Practitioner drafts the proposal in a way that is fair to both you and your creditors. This is important because if the proposal appears unreasonable to your creditors, they are likely to reject it.
We work with a panel of licensed Insolvency Practitioners who are able to help you set up a Scottish Trust Deed, free of charge.
Please click here to complete an application form for a Scottish Trust Deed.
Please click here to contact an independent adviser about Scottish Trust Deeds.
Once the Scottish Trust Deed proposal has been accepted, the Insolvency Practitioner supervises it by ensuring that all its terms and conditions are kept to.
Scottish Trust Deeds Criteria
If you decide to set up a Scottish Trust Deed you have to agree to the following:
- To pay the agreed monthly amount on time.
- Not to take any more credit during the life of your Scottish Trust Deed.
- o-operate with the Insolvency Practitioner who is supervising your Scottish Trust Deed.
- Tell the Insolvency Practitioner if your financial circumstances alter.
Advantages of Scottish Trust Deeds
The main advantages of Scottish Trust Deeds are as follows:
- Scottish Trust Deeds put the debtor in control of his financial problems.
- Scottish Trust Deeds cost less to administer and are more flexible than sequestration.
- If you set up a Scottish Trust Deed you can still hold public office.
- Unlike sequestration, the details of Scottish Trust Deeds are not published.
- Your creditors are not allowed to add any more interest to your debt or take any further action against you.
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