Protected Trust Deeds

• What is a Trust Deed?
• When does a Trust Deed become a Protected Trust Deed?
• How does a Trust Deed work?
• Is a Trust Deed a loan?
• Is a Trust Deed Government approved?
• How do I get the process started?
• What am I committing myself to?
• How long does a Trust Deed last for?
• Are you dealing with all of my debt?
• Will my credit rating be affected?
• If my Trust Deed is not approved, what happens?
• What happens if I stop paying?
• What if my circumstances change?

What is a Trust Deed?
There are two types of Trust Deed, Trust Deed and Protected Trust Deed both are available for residents of Scotland only. It is a process for individuals with financial difficulties to enter into an arrangement with their creditors as an alternative to potential sequestration (bankruptcy). The Trust Deed process is not as formal as sequestration and avoids some of the restrictions of being bankrupt. The majority of individuals seek a Protected Trust Deed as this prevents creditors going to court to make you bankrupt.

(back to top)

When does a Trust Deed become a Protected Trust Deed?
To become protected your trustee will need to advertise your Trust Deed in the Edinburgh Gazette and will write to all of your creditors advising that you wish a Protected Trust Deed. Your creditors have five weeks from the date of publication of the notice to object. Your trustee will apply to the Accountant in Bankruptcy for your Trust Deed to become protected provided he has not received written objections from creditors who represent more than one half of your creditors in number of all of your creditors or one third in value of all of your creditors. Once your Trust Deed becomes protected, all of your creditors who have been notified of the Trust Deed can no longer take action against you to recover the debt.

(back to top)

How does a Trust Deed work?
A Trust Deed is an agreement whereby certain assets or disposable income is transferred to a trustee. The trustee will sell the assets (if available) and manage the proceeds along with any disposable income for the benefit of your creditors. Your asset value and/or disposable income effectively creates a fund of money for distribution to your creditors in lieu of the sums due to them.

(back to top)

Is a Trust Deed a loan?
No. It is a process whereby all your available assets and disposable income are used to pay something to your creditors in return for the discharge of any remaining balance.

(back to top)

Is a Trust Deed Government approved?
Yes. The Trust Deed is a recognised method for individuals seeking to deal with their financial difficulties in a responsible way.

(back to top)

How do I get the process started?
You will need to speak with an advisor to determine your suitability for a Trust Deed. Assuming this is a possible solution, you will be asked to attend a meeting with a member of the trustee’s staff. The meeting allows the trustee to determine the extent of your financial difficulty. The meeting can take place either at your home or the trustee’s office.

(back to top)

What am I committing myself to?
A Trust Deed is a legally binding agreement between you, your trustee and your creditors. You are agreeing to make an agreed contribution towards your outstanding creditors. Failure to co-operate with your trustee or to adhere to the terms of the Trust Deed is a serious matter which will be dealt with by your trustee accordingly.

(back to top)

How long does a Trust Deed last for?
It will normally last for three years, although in certain circumstances it is possible for a Trust Deed to be completed in a shorter period.

(back to top)

Are you dealing with all of my debt?
You can only include unsecured debts on a Trust Deed. If you are having problems with priority debts such as Mortgage, Rent, Hire Purchase agreements or utility bills then you should contact these direct as failure to pay your priority debts may put you at risk of losing your home.

(back to top)

Will my credit rating be affected?
If it hasn’t already it most certainly will be once you are on a Trust Deed. Unpaid debts will affect your creditworthiness, however if a Trust Deed is successfully concluded, that fact will be recorded on any status report and may be more favourable from the point of view of any future credit provider.

(back to top)

If my Trust Deed is not approved, what happens?
An alternative arrangement to pay your debts will have to be made. Your advisor at No Debt Now will be able to discuss these options with you.

(back to top)

What happens if I stop paying?
If you do not make payments to your Trust Deed your trustee will take action ie; contacting your employer, freezing your bank accounts or petitioning the court for your sequestration. You should take care not to agree to anything that is not realistic and achievable.

(back to top)

What if my circumstances change?
If you have a genuine change in circumstances you must contact your trustee as soon as possible.

(back to top)