Trust Deed – Questions and Answers
What is the difference between a Trust Deed and an IVA (Individual Voluntary Arrangement)?
A Trust Deed is the Scottish equivalent (in principle) of an IVA (Individual Voluntary Arrangement).
An advisor will talk through options and help you make the decision.
Although the letters and calls you may have experienced recently may suggest otherwise, your creditors want to help you with your situation and recover as much of their debt as possible. As long as you communicate honestly with them about your situation, they will understand. In most cases they will accept less than what you owe, if that is all you can afford, providing they are satisfied that you will keep to any agreement.
Sequestration (bankruptcy) is costly, time consuming, and a large amount of the money raised from a sequestration (bankruptcy) will be used to cover professional fees, therefore creditors would in most cases prefer not to resolve the situation in this way.
A Trust Deed offers the simplicity of a repayment arrangement between yourself and your creditors with legal backing, without the high cost and low returns of a sequestration (bankruptcy).
Your creditors will welcome a Trust Deed where appropriate, as an effective resolution to the situation that you find yourself in.
No, but if you have equity, this will be taken into account and may need to be released to pay your creditors. If the property is joint-owned, then an appropriate portion of the equity will be taken into consideration.
No, a Trust Deed is an arrangement for responsible people who want to deal with their debt problem, and as such you will not prejudice your employment.
No, you will not necessarily have to give up your business or directorship in a Trust Deed.
You can include debt to banks, finance companies, credit or store cards, HM Customs & Excise (VAT), Inland Revenue, and loans made by your friends and family. Debt that cannot be included are mortgage debt, hire purchase, student loans, fines, debt incurred through fraud, maintenance and child support arrears.
It is very important that once in a Trust Deed, that monthly payments are made as proposed. If at any point your financial situation changes and the monthly payments are no longer affordable, then you must consult immediately with your Trustee.
If you don’t keep up payments then your supervisor can initiate sequestration (bankruptcy) proceedings against you.
Your remaining debt will in effect be written off and you will be free from debt.
You can choose not to notify your family, and even your partner, but we would advise that you do inform those that are very close to you.
Your Trust Deed will cover your unsecured debt and arrears, such as unsecured loans, credit cards and rent arrears.
Secured debt is secured against assets you own, such as a house or a car. If you fail to keep up repayments on secured debt your assets may be at risk. Unsecured loans are not secured on any asset.
If the Trust Deed is accepted it will prevent any further action, including the addition of charges, and all interest will be frozen.
The process of preparing the Trust Deed will begin immediately and is usually set-up and fully in effect within 6 weeks.
There are other alternatives to a Trust Deed if it is not approved, Dissolve Debt will be happy to advise the next course of action if the Trust Deed fails.