Trust Deed FAQs
What is a Trust Deed?
A trust deed is a process whereby individuals with financial difficulties enter into an arrangement with their creditors (through a trustee) as an alternative to potential sequestration (the Scottish term for bankruptcy). The trust deed process is not as formal as sequestration and avoids some of the restrictions of being bankrupt.
Is a Trust Deed a loan?
No. A trust deed is not a loan. It is a process whereby your available assets and disposable income are used to pay something (usually not the full amount due) to your creditors in return for the discharge of any remaining balance.
Is a Trust Deed an accepted and goverment approved debt solution?
Yes. In the last few years the trust deed process has become a recognised and prevalent method for individuals seeking to deal with their financial difficulties in a responsible way.
Is a Trust Deed a legal process?
Although the trust deed is a legally binding agreement it is not subject to a legal process in the same way that a sequestration is.
Is a Trust Deed a process that requires court involvement?
No. There is no court involvement required to set up a trust deed.
When should I consider a Trust Deed as a solution for debt problems?
In very general terms a trust deed may be an appropriate solution for your debt problems where you have some assets and / or disposable income to enable some payment to your creditors, but the level of assets and / or disposable income are insufficient to enable payment in full at this time or in the foreseeable future.
How does a Trust Deed work?
A trust deed is an agreement whereby certain of your assets and / or disposable income is transferred to a trustee. The trustee will value the assets and agree with you how any value of those assets will be raised. 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. Unlike debt consolidation, a trust deed does not mean a new loan.
What am I committing myself to if I sign a Trust Deed?
A trust deed is a legally binding agreement between you, your trustee and your creditors. You are agreeing to convey your assets to a trustee and 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.
How long does a Trust Deed last?
A trust deed will normally run for three years so long as you co-operate with your trustee and comply with the terms of the deed, although in certain circumstances it is possible for a trust deed to be completed in a shorter or longer period (maximum 5 years)