Trust Deeds

By: Money Advice Group  05/01/2011
Keywords: debt management, debt advice, Debt Help

 Trust Deeds are quite simply a legal agreement between debtors in Scotland and their creditors to pay off their debts over a pre agreed period of time. The Trust Deed is underpinned by the Bankruptcy (Scotland Act) 1985 which created the ‘protected’ trust deed, administered by a qualified Insolvency Practitioner (IP) on behalf of the creditors. Trust deed fall into two types; voluntary and protected. A voluntary Trust Deed is where an agreement is made between a debtor and their creditors to repay part of what they owe but this type of Trust Deed is not binding on creditors unless they all agree to its terms. A protected Trust Deed however goes one step further by making it binding on all creditors.. When a trust deed is protected non-agreeing creditors are denied from enforcing their debt by sequestration or any other means, although they can of course apply to claim a payment from the trustee. In many respect the process is very similar to the IVA available in the rest of the UK however a Trust Deed is unique to Scotland under Scottish Law.

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