A Trust Deed is one form of Scottish debt solutions only available in Scotland. They are an agreement between someone struggling with debt and their creditors, in order for the borrower to pay back some or all of their debt. At the end of the trust deed, the individual is declared debt free. The borrower’s assets are given to a trustee, who is a qualified insolvency practitioner, to sell in order to pay back the debts. The borrower also usually has to make payments towards the debts from their income for five years, although the amounts and timescale vary case by case.
For a trust deed to become protected more than half the creditors (or at least creditors representing two-thirds of the debt involved) included in must agree to its terms. Protected trust deeds are listed in the Register of Insolvencies, meaning that credit agencies and banks will know about it, which will affect the individual’s credit rating.
Trust deeds cannot become protected if:
The agreed payment plan would pay off all the debts in full
The debts involved total less than £5000
Too many of the creditor’s involved object to the terms