Trust Deed

A Trust Deed is a formal agreement between a Debtor and their Creditors. To enter in to a Trust Deed it is necessary to instruct an Insolvency Practitioner to act on your behalf. The Insolvency Practitioner acts as your Trustee and will liaise with all of your creditors.

You will be asked to provide an income and expenditure breakdown and a list of Creditors with recent statements. At this stage it is very important that you include all of your expenditure and be honest with your Trustee; they can only go by what you have told them. With this information your Trustee will prepare a proposal to all of your Creditors. Your Creditors will be asked to vote for or against the Trust Deed.

For a Trust Deed to be successful 67% of your Creditors must vote for the proposal. Once the Trust Deed has been agreed, it will become Protected, preventing your Creditors from being able to pursue you for debts. All further contact will be directed through the Trustee.

Once the Trust Deed has been Protected it will be advertised in the Edinburgh Gazette.

If you do not have any assets it is possible to make monthly payments towards your debts. A Trust Deed normally lasts for three years. Once this period has ended and all payments have been to the agreed terms your debts will be cleared. Any amount still owed will be written off by your Creditors.

Your home is at risk (it may be sold) if you are unable to meet your Creditor’s demands. It may however be possible to release the equity from the property; your Trustee will be able to advise you of the options available.

A Trust Deed is a legally binding contract and will be registered on the Insolvency Register. Providing the debtor keeps to the agreed terms there will be no further action.

Finally it should be noted a person entering into a Trust Deed can not continue to trade on their own or be a director of a Limited Company.