A Trust Deed is simply a legal agreement in Scotland that allows for Debt Settlement through a specific process and agreed time. The Scottish Trust Deed is supported by the Scottish Bankruptcy Act of 1985 which created the arrangement, and when utilized properly, and by a qualified Insolvency Practitioner, can give Scottish nationals the option to write off up to 90% or £6500 maximum amount of their debt and spread the rest of the repayments over a period of three years. The English version, an Individual Voluntary Arrangement or IVA is similar but has less advantages in respect of how much can be written off (only 70%).

What it also does, which can allow for some serious peace of mind, is to restrict all communication from Creditors, which halts all letters of legal action etc., from clouding your lifestyle any further, and opens up a window of time that allows you to get back on top of things while not having to spend all available cash on debt repayment.

Extra And Associated Costs

Finally, there are of course applicable fees and costs which include debt arrangement schemes and debt management plans. Depending on how much is owed and how many creditors will be covered. There are however, no ongoing management fees, as they are deducted before sharing to your creditors. So make sure you keep these extra costs in mind before applying, as they might come as a surprise.

There Are Two Types Of Trust Deed

The two types of deeds are voluntary and protected. The voluntary deed is made in agreement with the creditors, avoids the judicial system almost completely, and the creditor is not legally bound until they have agreed to the terms and conditions.

The protected deed is a stricter arrangement, enforced by the law, the AiB in fact (Accountants In Bankruptcy) and pushed on creditors, whether they agree or not. If the creditor fails to follow the terms of this deed, then they are halted from enforcing the debt through any other means whatsoever, which could include sequestration of the debtors estate or property. So utilizing this form of protection could be extremely helpful in regards keeping ones home should they fall on hard times.

The Risks Involved In Utilizing Scottish Trust Deeds


Using Trust Deeds in Scotland is not without its risks, especially as you must commit to the legal requirements on your end, or face the wrath of the legal system. It is also likely that utilizing this function may also damage your Credit Rating, and therefore make it harder to get credit elsewhere. One of the worst case scenarios that may occur is that you many even need to release equity from your house in order to help with the repayments.

Why And When Should One Consider Trust Deeds?

These Deeds should be considered by both parties during times of uncertainty, especially seeing as both parties are guaranteed. However, the creditor may lose a substantial amount of money as a result, seeing as after the 36 Months, they must, by law, write off any unpaid balances, because it is considered to be settled fully

These Deeds have been created to be a debt control for Scottish nationals, and it helps clear existing debt while simultaneously controlling future debt payments. The amount to be repaid is also not fixed and varies according to the repayment capabilities of the debtor, and once the Trust Deed Scotland is in effect, the interest rates are completely frozen. Furthermore, once the process is brought to a close, the creditor cannot issue any legal action against you.

Should the process fail entirely, the whole liability for the repayment of debt and the costs/fees incurred by the Insolvency Practitioner must be paid by you, which may eventually result in sequestration… which would have been one of the reasons for attempting to utilize the deed in the first place. So ensure you take the process seriously.