Trust Deeds (Scotland only)

What is a Trust Deed?

Trust Deeds are quite simply a legal agreement between debtors in Scotland and their creditors to pay off their debts over a pre agreed period of time. The Trust Deed is underpinned by the Bankruptcy (Scotland Act) 1985 which created the ‘protected’ trust deed, administered by a qualified Insolvency Practitioner (IP) on behalf of the creditors. Trust deed fall into two types; voluntary and protected.

A voluntary Trust Deed is where an agreement is made between a debtor and their creditors to repay part of what they owe but this type of Trust Deed is not binding on creditors unless they all agree to its terms.

A protected Trust Deed however goes one step further by making it binding on all creditors.. When a trust deed is protected non-agreeing creditors are denied from enforcing their debt by sequestration or any other means, although they can of course apply to claim a payment from the trustee. In many respect the process is very similar to the IVA available in the rest of the UK however a Trust Deed is unique to Scotland under Scottish Law.

If you are considering a Trust Deed as a way of helping you reduce the pressure on your finances you should understand exactly what is involved before you start.

What are the benefits of a Protected Trust Deed?

  • You only have to make a single affordable payment each month
  • All interest and credit charges on your existing debts will stop
  • All your creditors, even those who don’t agree with it, are bound by the terms of the agreement
  • Creditors can’t take any further action against you
  • Your outgoings are fixed for a sensible duration (usually 48 months)

What are the disadvantages of a Trust Deed?

  • Entering into a Protected Trust Deed will affect your credit rating
  • All your assets and liabilities have to be declared upfront, and you will be required to release any equity you may hold in property. Any large or valuable assets may also be sold to realise their value
  • You will not be allowed to hold a post of a Director in a Limited Company
  • The details of your Protected Trust Deed will be advertised on the Register of Insolvencies until two years after the date of the trustees discharge
  • Failure to meet the payments of a Protected Trust Deed can mean that you may be made bankrupt

To find out more, simply call us today on our free phone number 08002 800 492 or fill in the Contact Money Advice Group form on this page and we’ll call you back. Alternatively, please visit Knightsbridge Insolvency Services’ Trust Deeds Page.

Money Advice Group is the parent company of Knightsbridge Insolvency Services (Knightsbridge). Knightsbridge is the service provider of Protected Trust Deeds (PTDs) and will be the company responsible for administering the PTD. Knightsbridge is a wholly owned subsidiary of Money Advice Group. Details of Knightsbridge’s Protected Trust Deed fees can be found here.