What is a Trust Deed?
A protected trust deed is a legally binding arrangement in Scotland, usually lasting for a duration of 4 years, although a longer period can be considered depending on your circumstances. You agree to pay a regular amount of money towards your debts and at the end of a fixed time the rest of your debts will be written off.
A trust deed is a form of insolvency, so your unsecured debts need to outweigh the value of your assets, such as a house or vehicles. Unsecured debts include things like credit card debt, personal loans and store cards.
Trust deeds are only available if you live in Scotland. If you live in England, Wales or Northern Ireland, an Individual Voluntary Arrangement (IVA) is a similar solution, but it’s important to note that it has different benefits, risks and fees associated with it.
How it works
All your belongings and property (assets) are given to someone who will look after your financial affairs. They are called your trustee. The trustee aims to pay your creditors as much as possible of the debt owed to them. This may involve the sale of some of your assets so that the money raised can be paid to your creditors.
A trust deed can become ‘protected’ if most of your lenders are happy with the terms of the trust deed. This means that the trust deed is compulsory on all creditors, and they cannot take any steps to recover their money.
If a trust deed is not ‘protected’, it will not be binding on all of your lenders, and they could still take action to recover the money owed to them.