Learn about Trust Deeds In Scotland

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A trust deed is a voluntary arrangement with your creditors to repay part of the money owed to them. Under the program, the rights to the stuff you own are transferred to a trustee (qualified insolvency practitioner), who will sell them to pay your creditors part of what you owe them. Also, part of your income will be used to repay your creditors for a specified period of time (usually 36 months).


Please note: An ordinary trust deed is not binding on creditors unless they agree to its terms.

Another type of a trust deed is a protected trust deed which is binding on all your creditors. Your trust deed will become protected if a sufficient proportion of creditors agree to it. You need agreements from at least half of your creditors and the ones that agreed (combined) must be owed at least one third of your total debt. Once approved for the protect trust deed and if you follow the terms of the agreement, your creditors usually can take no further action to pursue your debt or to make you bankrupt. A protected trust deed prevents you from applying for your own bankruptcy or for a debt payment program under the Debt Arrangement Scheme.

Please Note: You will not be protected from action by your new creditors if you run up any new debts after you enter into the trust deed.

If you cooperate with your trustee by surrendering your assets and paying your contributions, then your trustee will issue a letter of discharge at the end of the agreed period and it will be recorded in the Register of Insolvencies. You will be discharged from any outstanding debts which were due at the date you signed your trust deed, when you are discharged from a protected trust deed. This means that your creditors are no longer allowed to try to collect money that was owed to them when you signed the trust deed. The exceptions to this rule are: penalties, fines, forfeiture and compensation orders imposed by any court, any liability due to fraud, any obligation to pay aliment,student loans,and money owed to someone who holds a security on your property such as a secured loan or mortgage loan.

The source of this information was provided from aib.gov.uk and further information on trust deeds can be found there. Disclaimer: The above information was written in good faith, but we cannot guarantee accuracy or credit approval.