Trust Deed (only available in Scotland)
Description
A Trust Deed is an agreement with creditors. It's entered into
with the assistance of an Insolvency Practitioner.
Eligibility
Typically carrying consumer debts of £5,000 or more, you
will be struggling to meet current repayments to your creditors. You may be
able to pay a certain reduced amount per month towards your debt, or you may
be able to release a lump sum through remortgaging your house or the sale of
another asset.
Advantages
- Takes the pressure off - One affordable payment per month to the creditors
- A large amount of your debt may be written off.
- It may be possible to make more favourable arrangements than under sequestration
to retain assets such as the family home.
- Fixed repayment period (normally 36 months).
- Your creditors cannot take further action against you, arrest your earnings,
or continue to charge interest.
- Trust Deeds are usually more flexible and cost less to administer than sequestration.
Disadvantages
- Home owners may be forced to sell if creditors cannot be paid from other sources.
- Debtors cannot trade on their own account or hold directorships of a limited
company.
- The arrangement is binding on you as well as your creditors.
- If you were to default on the arrangement then the Insolvency Practitioner can
petition for your sequestration.
