A Trust Deed is a legally binding voluntary arrangement (Similar to an IVA in England and Wales), which offers debtors a bankruptcy alternative. It is only available to residents of Scotland.
It is designed to help those who cannot repay their debts a way to establish a monthly repayment schedule based on what you can afford to pay. The Trust Deed normally lasts for three years. One you reach the end of the term, the arrangement comes to an end, and any remaining debts are fully written off.
Trust Deeds are applicable where a debtor does not have enough disposable income to meet his/her unsecured credit repayments.
It should be made clear that Trust Deeds are a legally binding arrangement between the debtor and a licensed Insolvency Practitioner (the Trustee) and should only be entered into with full knowledge of all the implications..
Although considered an informal bankruptcy, a Trust Deed is still regulated by The Bankruptcy (Scotland) Act of 1985.
If other specific criteria are met, a Trust Deed can be registered as Protected. This 'Protection' has the added benefits of preventing creditors from taking any further legal action against you and also ensures that all interest will be frozen on your debts.
