FAQs

Questions

Trust Deed

1. What is a Trust Deed?
2. Is this the same as an IVA?
3. Will a Trust Deed clear off my debts?
4. What is the difference between secured and unsecured debt?
5. How long will it take to set-up a Trust Deed?
6. Can I arrange my own Trust Deed?
7. Will my credit rating be affected?
8. Is a Trust Deed another name for a loan?
9. What does it mean when it becomes 'protected'?
10. What happens after my Trust Deed?
11. Can I get credit if I have a Trust Deed?
12. Why would my creditors accept a Trust Deed?

 

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Answers

Trust Deed

1. What is a Trust Deed?

   A Trust Deed provides the debtor with a more practical alternative to Bankruptcy. It is a legally binding arrangement between you and you creditors, where you pay back a set amount over a fixed term, commonly over three years. The debtor only pays back what they can realistically afford and any unpaid debt is written off on completion of the Trust Deed.

   A Trust Deed is Scottish legislation only, and the rest of the UK is serviced by IVA.

2. Is this the same as an IVA?

   In principle, a Trust Deed is the Scottish equivalent of an IVA.

3. Will a Trust Deed clear off my debts?

   A Trust Deed will cover your unsecured debts, but there will be those secured debts that cannot be written off such as mortgages, secured loans or student loans.

4. What is the difference between secured and unsecured debt?

   A Trust Deed cannot cover your Secured Debt. Secured debt means that the debt is secured against an asset, typically your home. If you fail to keep up on repayments then your assets will be at risk. Unsecured loans are not held against any items.

5. How long will it take to set-up a Trust Deed?

   It is dependant on the individual circumstances, but on average it should take about 6 weeks.

6. Can I arrange my own Trust Deed?

   No, your Trust Deed account must be handled by a qualified Insolvency Practitioner.

7. Will my credit rating be affected?

   Yes, a Trust Deed will affect your credit rating as you are breaking the your terms of credit. However if you are making monthly payments that are lower than the contracted amount or have missed payments then your credit rating is already damaged.

8. Is a Trust Deed another name for a loan?

   No, it is a legal process that is agreed with your current creditors to repay your debts. You will not make any further borrowings.
   

9. What does it mean when it becomes 'protected'?

   When a Trust Deed becomes Protected, it basically means that no further action will be taken on your account by the creditors.

10. What happens after my Trust Deed?

    After you have completed your Trust Deed, any remaining debt will be written off and your creditors will have no further claim against you.

11. Can I get credit if I have a Trust Deed?

    During the term of your Trust Deed you will not be able to get any credit in excess of £250 and you must notify the lender about your Trust Deed. 

12. Why would my creditors accept a Trust Deed?

    From the creditors point of view, a Trust Deed offers them a better outcome than Bankruptcy. As they will be able to reclaim part of the debt in part and  they can avoid long and expensive court proceedings.

Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.

Your property will be protected within an IVA but you may be required to release all or part of any equity during the period of the arrangement.

Failure to complete the term of an IVA can result in bankruptcy.

(In Scotland, a PTD is the equivalent to an IVA.)