“A Trust Deed – once it becomes protected – is the Scottish equivalent to an Individual Voluntary Arrangement.
Trust Deeds are only available to citizens living in Scotland who have accumulated unsecured debts of £10,000 or more, and who are struggling to repay creditors they owe money to.
A Trust Deed is an alternative to Bankruptcy – known as Sequestration in Scotland. In recent years it has proved to be an effective debt management solution because it allows people to repay creditors at a rate they can afford.
When you apply for a Trust Deed, a Trustee will act on your behalf – contacting the creditors you owe money to and negotiating lower repayment rates. Providing your creditors agree to the proposed plan, the deed will become a Protected Trust Deed, also known as a PTD. This means you will be protected against court action from creditors and Sequestration.
When a Trust Deed becomes a Protected Trust Deed, it means your agreement can begin and you can start repaying your creditors. Like an IVA in England and Wales, interest rates and charges will be frozen and any remaining unsecured debts included in the PTD that you cannot afford to repay, will be written off at the end of the term. It’s worth noting that if you are a homeowner, you may be asked to release equity from your property to repay creditors but this is dependent on your circumstances. The duration of a PTD typically lasts for 3 years – so you can expect to become free of unsecured debts in 36 months; however your credit record will be affected in the medium to long term.
Failure to keep up with your PTD repayments could result in Sequestration.
Like any debt management arrangement, terms and conditions apply. The amount you repay is individual to your personal circumstances – so it’s always in your best interest to speak to a reputable company for more details.”