What is a Trust Deed?

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 voluntarily transfer of their assets and liabilities to the Trustee for the benefit of creditors. The debtor must have assets and / or disposable income to fund the process and pay a dividend to creditors.

The Trustee will prepare a proposal to creditors confirming how the Trust Deed will be funded, what assets 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” which means that creditors are bound by the terms and cannot pursue the debtor for settlement of their debt. If the Trust Deed does not become protected the debtor would have to revisit your options, 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 and credit ratings and 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 must take urgent action. A Trust Deed is one debt solution available to residents of Scotland who have unsecured debts of over £5000.

Next Steps

mlm Solutions 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.

For Scottish debt help, see also:-

You may also be interested in considering the following related pages if you live in Scotland:-

Trust Deed & Debt Management Advice Glasgow & Edinburgh, 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.

 

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