routes out of personal debt
Protected Trust Deeds
A Trust Deed is a formal insolvency procedure available to individuals no longer able to sustain their debt repayments. It is a voluntary agreement between a debtor and his or her creditors whereby a compromise is reached which allows creditors to recover some of the money owed to them.
A suitably qualified insolvency practitioner must be appointed to set up the trust deed and they assume the role of “Trustee”. Debtors will then convey their assets and liabilities to the Trustee for the benefit of creditors. The debtor must have assets and / or A monthly disposable income to fund the process.
The Trustee will prepare a proposal to creditors confirming what assets and contributions are included and how much they can expect to receive. Assuming the requisite number of creditors do not object to the terms of the Trust Deed it will become “protected” this means that creditors are bound by the terms of the trust deed and cannot pursue the debtor for settlement of their debt. If the Trust Deed does not become protected the debtor would have to revisit the options available to them, including Sequestration.
Protected Trust Deeds normally last for a period of four years, but all are reviewed on an individual basis. Entering a Trust Deed can affect employment terms, credit ratings and could lead to Sequestration. Trust Deeds are recorded in the Register of Insolvencies (ROI).
Although the process of a Trust Deed is informal it is legally binding and once signed, debtors are committed to the terms they have agreed with their Trustee and creditors.
When to consider a Trust Deed
If you are struggling with debt to the extent where you have lost control of your overall finances and cannot meet your repayments or pay your household bills when they fall due then you should take financial advice. A Trust Deed is one debt solution available to residents of Scotland who have unsecured debts of over £5000.
SKSi has extensive knowledge and experience in setting up and administering Trust Deeds. We work with debtors to complete a monthly income and expenditure which allows us to define a monthly contribution which forms part of the proposal. We present this to creditors and negotiate a mutually agreeable monthly repayment amount over 48 months. When approved we administer the Trust Deed, on behalf of the debtor, through to its completion when any remaining debt is written off allowing the individual to become debt free.
Further Trust Deed guidance is available at the Accountant in Bankruptcy (AIB) website: https://www.aib.gov.uk/protected-trust-deed
Trust Deed & Debt Management Advice in Scotland
We understand that facing up to financial challenges can be an extremely difficult and stressful time. However, you should be reassured to know that there are options available and, with the right advice and support, you can take the necessary steps to improve your situation. For more information on trust deeds, please contact us at an office near you.