Write Off Unaffordable Debts
With a Trust Deed in Scotland…

Once you have transferred assets to your trustee, it is his duty to sell them for the benefit of your creditors. Any assets or money left over after all the expenses and debts have been paid should be returned to you.

It will say in your agreement how long it is to run for and when you will be discharged. Normally it is 4 years from the date you sign it (though it can be longer). But unlike in a sequestration, this discharge is not automatic.

Your creditors must discharge your trustee before you can be discharged.

This means a Protected Trust Deed may remain open in the Register of Insolvencies for some time after the 4 years. Your discharge is usually binding on all your creditors. This means they can’t chase you for the money you owed them before you signed the agreement.

But there are 2 exceptions. These are;

1. Debts not covered by the agreement (like over-payment of social security), or if a creditor who objected to the agreement can prove in court that he would have got more of his money back if you had been made bankrupt. This is a very rare event indeed.
2. If the Trust Deed fails to become protected, your discharge does not stop creditors who objected in the first place still chasing you for the money you owe them.

No, you won’t be blacklisted but you may find it difficult to obtain credit whilst on the plan and for a period after. Once the plan is complete your credit rating will start to improve.

There are things you can do to help improve your credit rating, like taking out a credit card and paying it off in full every month.

This shows lenders that you can borrow money responsibly and pay it back on time and in full. This is one of the most effective ways to improve your credit file.

Yes. They can sell all the property, but, if your house is jointly owned or if it is the family home, your trustee needs the permission of the other owner or anyone else who has rights to live in the house.

If the other owner refuses permission to sell, the trustee can go to court to try and force what is known as a division and sale.

If this is granted, the house can be sold, and your share of the money raised will go to pay off your debts. The other owner will get their share).

Normally if you have Equity in your property a small re-mortgage to raise funds will prevent home being sold.

Sometimes, but it doesn’t happen very often.

1. Your trustee can petition to have you sequestrated at any time they think it would raise more money for your creditors.
2. If one of your creditors thinks they can prove that they can get more of their money repaid if you are sequestrated, they can present a petition in the court for your sequestration, even if it has been ‘protected’.

These are both very rare events. If you run up more debt after you have signed the Trust Deed, the people you owe the new debt to can petition for your sequestration.