Trust Deed
(only available in Scotland)
Description
A Trust Deed is an agreement with creditors. It's entered into with the assistance of an Insolvency Practitioner.
Eligibility
Typically carrying consumer debts of £5,000 or more, you will be struggling to meet current repayments to your creditors. You may be able to pay a certain reduced amount per month towards your debt, or you may be able to release a lump sum through remortgaging your house or the sale of another asset.
If you are resident in England, Wales or Ireland you may be eligible for an Individual Voluntary Arrangement (IVA).
Advantages
- Takes the pressure off
- One affordable payment per month to your creditors
- A large amount of your debt may be written off
- It may be possible to make more favorable arrangements than under sequestration to retain assets such as the family home
- Fixed repayment period (normally 36 months)
- Your creditors cannot take further action against you, arrest your earnings, or continue to charge interest
- Trust Deeds are usually more flexible and cost less to administer than sequestration
Disadvantages
- A Trust Deed can help safeguard and avoid action against your home from your unsecured creditors. The Insolvency Practitioner can fully advise you on the position with property
- The signing of a Trust Deed does not prevent you from working or being self employed, however there may be restrictions in acting as Director of a Limited Company
- The arrangement is binding on you as well as your creditors
- If you were to default on the arrangement then the Insolvency Practitioner can petition for your sequestration
- Once agreed, the Trust Deed will stop all interest and charges being added to your unsecured debts