How a Trust Deed can help YOU!

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Trust deeds are the Scottish equivalent of an Individual Voluntary Arrangement (IVA).

By using a trust deed, the debtor transfers their estate to the trustee to be held on trust for the benefit of creditors. Providing the debtor complies with the obligations set out in the trust deed (including the making of regular monthly repayments to the creditors) the estate held on trust remains untouched and is returned at the end of the relevant period.

A trust deed protects the debtor from the specified debts being legally enforced against him once the deed has been registered as ‘protected’. However, it will not affect any creditor action taken before the trust deed has been registered which means that earning and bank arrestments will remain in effect.

Unlike an IVA, it is normally only available to debtors who owe £10,000 or more and usually lasts for 3 years instead of 5. There is no court involvement and the existence of the trust deed and the debtor’s perilous financial situation is not publicised.

Trust deeds allow people to pay back a fixed amount of the overall debt and the outstanding amount is essentially written off.

  • The debtor owes money to 3 or more creditors;
  • The debtor has a monthly disposable income, usually £200 or more;
  • The debtor is required to make regular monthly payments to the creditors;
  • All interest and other charges are usually frozen;
  • The aim is for the debtor to avoid bankruptcy. It is a win-win situation; the debtor (in most cases) can keep his valuable assets such as the family home, while the creditor stands a good chance of receiving more money than he would under a bankruptcy situation.

A trust deed remains a powerful and effective debt solution option for those who find themselves in debt.

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