Trust Deed Debt

Trust deed debt is an issue which is often shrouded in mystery for those who are looking to repair their financial well-being. While the Scottish trust deed is often referred to as a Scottish IVA, it is in fact very similar to an English IVA, i.e. a voluntary arrangement between creditors and debtors to ensure that at least a portion of the individuals debt is paid off. So how exactly do you go about wrapping up your debt within a trust deed?

In order to put together a trust deed you will need to use the services of a qualified insolvency practitioner who will help you confirm your debts, income and cost of living. If your debt and financial situation qualifies you in principle for a Scottish trust deed (or protected trustee) then a repayment plan will be formulated which will be wholly dependent upon your income and cost of living. Once this has been agreed between yourself and the insolvency practitioner a copy will be sent to your creditors who will be given a period of reflection and asked to comment on the proposals.

Under Scottish trust deed law, a non-reply by your creditor with regards to a trust deed proposal is seen as acceptance and so long as debt equivalent to one third or less of the overall debt does not attract a rejection of the proposal then the trust deed can be formally signed and put in place. From that moment on your trust deed debt will be wrapped up in this legal arrangement and you will need to put in place a direct debit to cover the agreed monthly repayments. After the trust deed expires, normally on the 36th month, the outstanding debt will be written off and you will then be released from the agreement.

It is imperative that you stick to the arrangement to the letter of the law as missed payments can lead to potential complications and the winding up of the trust deed agreement. If your circumstances do change it is vital that you inform your insolvency practitioner, otherwise known as a trust deed trustee, as soon as possible so that alternative arrangements can be made.

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