Scottish Trust Deeds in brief

A Scottish Trust Deed replaces all previous agreements held with all of your unsecured creditors. It is a formal contract that legally binds all your creditors to one new affordable monthly payment. A Scottish Trust Deed is supervised by an Insolvency Practitioner, known as a trustee, and is intended as an alternative to Bankruptcy.

A Scottish Trust Deed normally lasts for a period of up to 36 months. During this time you will make monthly payments, which are then paid to your creditors, through your trustee. These monthly payments are based on your ability to afford them and are paid to your creditors on a pro rata basis. They are taken from your disposable income, which is the balance between what you earn and your essential living costs.

The payment is calculated by your trustee and put to your creditors in a proposal. The creditors are then required to vote on your Trust Deed proposal.  This vote does not need to be unanimous. Of the creditors that actually vote, if more than 2/3rds in debt value terms, choose to accept the proposal, the Trust Deed is “protected” and becomes legally binding on all creditors whether they voted or not.

When the Trust Deed is protected all interest charges on the debts are frozen. The creditors also give an undertaking to stop demanding payment by phone and by letter and agree to accept payments through the trustee.

You are then required to make the agreed monthly Trust Deed contribution to the trustee for the term of the Trust Deed. At the end of the Trust Deed any remaining debt still unpaid is cancelled and considered to be paid in full.