How to Qualify a Trust Deed

This legislation is only available to Scottish Residents, and the rest of the UK are serviced by IVAs.

The basic Trust Deed criteria stipulates that you must be insolvent. This means that the debtor, does not have enough disposable income to pay your unsecured repayments after all living expenses have been deducted from your monthly income.

You have debts over £9k. If they have high levels of unsecured debt then you should qualify for a Trust Deed. It is important to get an up-to-date balance from all their creditors, as they may owe much more than you think!
Stable Income A stable income, which means we need the debtor to be employed or a have guaranteed income–such as a pension be warned disability does not count.

Contributions and Assets

The debtor must be advised that they will be expected to make a contribution from their income.

The debtor must provide information about their income and expenditure. The insolvency practitioner will assess a reasonable level of contribution based on the debtor’s excess income.
 
Contributions should not be sought from any social security benefits or tax credit

The debtor should be advised that an adequate level of contributions will be required in order to ensure that the protected trust deed makes an acceptable proposal for creditors (minimum dividends).  The level of contributions may be varied if the debtor’s circumstances change.  If the debtor cannot pay a contribution they must contact their trustee immediately and  if the debtor’s income increases they may be expected to pay a higher contribution.

The debtor must provide information about their assets. Debtors should be advised that deliberate misinformation about, or non-disclosure of assets, may be an offence under common law.

It is particularly important to ensure that the debtor fully understands that the trustee will seek to realise the value of any assets which they own and that this includes any equity in the debtor’s family home,  
 
The level of contributions and the number of contributions to be made must be specified before the trust deed is granted.
 

Advantages Of  Scottish Trust Deeds

• The trustee handles all correspondence from creditors, therefore relieving the pressure of debt.
• A Protected Trust Deed is usually more flexible and costs less to administer than sequestration (bankruptcy).
• With a Protected Trust Deed, the debtors creditors will be unable to add further interest, charges, or take any further action against them.
• They will in most cases still be able to hold certain public offices.
• Protected Trust Deeds normally last 3 years, after which any remaining debt will effectively be written off.