Scottish Solutions

What is a Trust Deed

A Trust Deed is a formal insolvency solution available in Scotland. It is a voluntary agreement between you and your creditors (the people or organisations you owe money to). Under a Trust Deed, you make regular payments based on your financial circumstances, usually for a fixed period. If the arrangement is successfully completed, any remaining eligible unsecured debt may be written off.

A Trust Deed can become “Protected” if a sufficient proportion of creditors agree to the proposal. When protected, it becomes legally binding on all included creditors and they cannot take further action to recover the debts covered by the arrangement.

Trust Deeds have eligibility criteria and may not be suitable for everyone. Your credit rating will be affected, and your home or other assets may be at risk. It is important to seek regulated advice before entering into any insolvency solution.

If you click “Get Started” and submit your details, a member of our team will contact you to explain how our service works and gather information about your circumstances. If appropriate, and with your consent, we may introduce you to an FCA-authorised firm or licensed insolvency practitioner for a full advice assessment.

We provide general information only and do not offer regulated debt advice. There is no obligation to proceed with any solution.

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When a Trust Deed might be an option for you

A trust deed might be an option for you if you have:

  • Debts of £5,000 or more
  • Enough money to make regular payments towards your debts. You can't set up a trust deed if your only income is from benefits
  • Belongings and property such as savings, investments, a car or a house. These can be sold so that the money raised can be paid to creditors.

Advantages of protected trust deeds

The advantages of protected trust deeds are:
  • No contact from people you owe money to - your trustee will deal with the people you owe money to (your creditors)
  • No more enforcement action - if you are thinking of setting up a trust deed, you can apply to the Accountant in Bankruptcy to stop your creditors taking any steps to recover the money you owe them, such as arresting your bank account. This is called a 'moratorium' and it lasts for 6 months. You can also apply for a moratorium if you are thinking of applying for bankruptcy or a debt payment programme under the Debt Arrangement Scheme. You can only apply for 1 moratorium in any 12 month period
  • Ability to pay bills - you don’t have to show that you are unable to pay your bills as they fall due. This is sometimes called 'apparent insolvency'. You have to be able to show this in order to apply for bankruptcy (called sequestration in Scotland)
  • Employment and public office - you are not barred from certain types of employment or public office as you would be under bankruptcy (called sequestration in Scotland)
  • Borrowing money – you are not legally stopped from borrowing money (obtaining credit) like a mortgage or a credit card, although this may be difficult to get in practice
  • Debts wiped out – your trust deed will usually come to an end after 4 years (called discharge). Most of your debts will be wiped out and you will not have to pay them back.
Trust deeds are not the only option to help you sort out problems with debts. Other options include:
  • A debt payment programme under the Debt Arrangement Scheme (DAS) - this may suit you if you can afford to pay off your debts in full from your disposable income in less than 4 years. There is more information about DAS on our DAS page
  • Bankruptcy (called sequestration in Scotland) – this may suit you if your financial situation has become intolerable because you can’t pay your debts as they fall due. You can apply for standard bankruptcy if you have debts of £3,000 or more. You can apply for 'Minimal Assets Process' (MAP) bankruptcy if you have debts of £1,500 or more and you have little or no disposable income or assets that can be used to raise money. Find out more about bankruptcy

    Things to consider


    Legal action can only be prevented if your Trust Deed becomes protected
    Your expenditure will be monitored and you may be asked to reduce expenses that are considered excessive
    Failure to comply may result in bankruptcy
    If you are a homeowner and have equity in your property, you may be required to release some to your creditors
    Your information will be added to the Insolvency Register

    Click "Get started" to start your journey, one of our friendly team will then be in touch to give you all the information you need to deal with your enquiry and refer you to one of our regulated associate experts.
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If you choose to proceed, we may introduce you to an FCA-authorised debt advice firm for a full assessment of your financial circumstances. They will review the options that may be available to you based on your individual situation.

Debt solutions are not suitable for everyone, and eligibility will depend on your personal circumstances. Fees may apply depending on the solution recommended, and these will be explained to you before you decide whether to proceed.

We are a debt help lead generation company and do not provide regulated debt advice. We may receive a referral fee from an FCA-authorised firm if you choose to proceed with a solution. There is no obligation to enter into any arrangement, and you are free to seek advice elsewhere.

 

What is a Debt Arrangement Scheme

The Debt Arrangement Scheme (DAS) is a statutory debt solution available in Scotland and overseen by the Scottish Government.

Under DAS, a Debt Payment Programme (DPP) can be set up to allow you to repay your debts in full through a single monthly payment based on your financial circumstances. Interest and charges may be frozen once the programme is approved.

An application must be submitted by an approved money adviser on your behalf.

A DAS may be considered where:

  • You have sufficient disposable income after covering essential household expenditure

  • You are able to repay your debts in full over a reasonable period

  • You wish to make one regular monthly payment

  • You are concerned about protecting your home or assets

DAS has eligibility criteria and may not be suitable for everyone. It can affect your credit file, and the arrangement will usually continue until your debts are repaid in full.

We provide general information only and do not offer regulated debt advice. If appropriate, and with your consent, we may introduce you to an authorised firm or approved adviser who can assess your circumstances and explain whether DAS or another option may be suitable for you.

Advantages of a DAS:

  • You would not be required to sell your assets to pay towards your debts
  • Creditors will freeze your interest and charges for the duration of the scheme
  • Gets you in a repayment plan, by the end of which your debts will be repaid in full
  • As a formal scheme, a DAS means that both you and your creditors will have legal protection

Disadvantages of a DAS:

  • Your plan will last as long as it takes for you to pay off your debts, which may be longer than other plans
  • You will agree to pay your debts off in full, so it’s unlikely that any will be written off for you by your creditors

What is a Sequestration

Sequestration is the Scottish equivalent of bankruptcy. It is a formal insolvency process available to individuals who are unable to repay their debts.

If sequestration is awarded, a Trustee will be appointed to take control of your estate. The Trustee may realise (sell) certain assets to repay creditors, and you may be required to make contributions from your income if you can afford to do so.

An application fee is payable to the Accountant in Bankruptcy (AiB), the government agency responsible for administering personal bankruptcy in Scotland. Fees and eligibility criteria are subject to change and should be confirmed at the time of application.

Creditors may also petition for your sequestration if certain legal thresholds are met.

Sequestration may be considered where:

  • You are unable to maintain regular repayments to your creditors

  • Your total debt meets the minimum qualifying level

  • You have limited alternative options available

Sequestration has serious consequences. Your credit rating will be significantly affected, and your home and other assets may be at risk. It may not be suitable for everyone, and regulated advice should be sought before proceeding.

We provide general information only and do not offer regulated debt advice. If appropriate, and with your consent, we may introduce you to an authorised firm or insolvency practitioner who can assess your circumstances and explain the options available to you.

Advantages of Sequestration

  • The process usually lasts one year, after which your debts will be written off
  • It will put an end to creditors chasing you for money
  • Most debts can be written off with sequestration. There are a few exceptions, such as debts taken out fraudulently, student loans and court fines

Disadvantages of Sequestration

  • Your assets – such as your home- may be sold in order to pay your creditors
  • Whilst the process lasts one years, the sequestration will be reflected negatively on your credit file for 6 years
  • You have to pay an application fee of £150 in full before your application can be considered

What is a Minimal Asset Process (MAP)

Minimal Asset Process (MAP) Bankruptcy is a form of bankruptcy available in Scotland for individuals with low income and minimal assets. It is administered by the Accountant in Bankruptcy (AiB).

If approved, eligible unsecured debts may be written off at the end of the bankruptcy period, provided you comply with the terms of the arrangement.

MAP Bankruptcy has strict eligibility criteria, which generally relate to your income, total level of debt and the value of any assets you own. It may be considered where:

  • You have little or no disposable income after covering essential household costs, or your income is primarily from certain benefits

  • Your total debt falls within the qualifying limits set by current legislation

  • You do not own property and your assets fall below the permitted thresholds

Eligibility rules and financial limits are set by legislation and may change. Your home, vehicle and other assets may be affected depending on your circumstances. Your credit file will also be impacted.

We provide general information only and do not offer regulated debt advice. If appropriate, and with your consent, we may introduce you to an authorised firm or insolvency practitioner who can assess your circumstances and confirm whether MAP Bankruptcy or another solution may be suitable for you.

 

Advantages of MAP

The fee to apply is £50, which is smaller than the alternative sequestration route
You can see your eligible debts written off once the scheme is completed
It will put a stop to creditors chasing you for the money that you owe
It lasts 6 months, as opposed to 12 months with sequestration

Disadvantages of MAP

Your application will not be considered until the fee has been paid in full
Your credit rating will be poorly impacted for up to 6 years following the commencing of the scheme
The criteria is more specific than other solutions, meaning not as many consumers will be able to qualify compared to sequestration and other solutions

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