WHAT IS A TRUST DEED?

• What is a Trust Deed?
• Trust Deed Pros and Cons
• Trust Deed FAQs

What is a Trust Deed?
A Trust Deed is a formal agreement between a debtor and the debtor’s creditors to help clear your debt. It is legally binding and must be set in place by a licensed Insolvency Practioner (the Trustee). It is a good alternative to Bankruptcy and an effective form of debt help. There are a lot of legalities involved with Bankruptcy whereas with a Trust Deed there in no court involvement at all.

How does it work?
The Trustee can be put in place by a professional Debt Advisor who would firstly go through your income, expenditure and debt details. From this, they would then calculate how much you can afford to repay. This would then be put into a proposal and presented to the creditors for approval.

Once the proposal has been accepted, you creditors are not allowed to directly contact you and all interest and charges are frozen. This is different to a Debt Management Plan which are informal agreements and means creditors can increase their demands on debtors at any time. A Trust Deed gets you one lower affordable monthly repayment for a set period (Usually 36 months), after this period any remaining debt is written off and you walk away debt free.

What is the criteria for a Trust Deed?
The following criteria is required for a Trust Deed;

• You must be a resident of Scotland
• You could also qualify if Scotland has been your main country of residence at any previous time.
• There is no minimum amount of debt required for a Trust Deed. Each one is based on your own unique circumstances and treated individually.
• Only unsecured debts can be included in a Trust Deed, i.e. Credit Card debt, Loans, Store Card debts etc.

The legal requirements
Trust Deeds are legally bound arrangements and are regulated by the Bankruptcy (Scotland) Act 1985. They are only available to people who are residents of Scotland or people who have lived in Scotland for a minimum of six months. You may also qualify if you have been a resident of Scotland anytime in the past. Trust Deeds need to be setup by a licensed Insolvency Practitioner or IP who will act as a Trustee and communicate with the creditors on your behalf.

Other things you should know about Trust Deeds

• You will be required to release any equity in your property.
• All assets and liabilities have to be declared.
• A Trust Deed will temporarily affect your credit rating.
• Your Trust Deed will be reviewed regularly. Usually every six months.
• Trust Deeds are not published in local newspapers.

Alternative solutions
If you don’t think a Trust Deed is for you then there may be other solutions available in the form of an IVA or Debt Consolidation Loan which are less formal arrangements.

Full and Final Settlements
There is another alternative arrangement to a Trust Deed which is called ‘Full and Final Settlement’. This process involves computing a single, lump sum payment that takes into account all the debt payments to be made. For more information on ‘full and final settlements’ contact us.

See if you qualify
See if you qualify for a Trust Deed by answering a few simple questions. Click the link here: Do I qualify for a Trust Deed?

Professional Help
If you would like more information on Trust Deeds or would like to apply for one give The UK Debt Advisor a call on 0800 043 2027 or use our free call back form.