Register of Insolvencies
The register of insolvencies is a statutory register about the insolvency of individuals and businesses in Scotland.
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Voluntary Trust Deed
A trust deed is a voluntary agreement between a debtor and their creditors (the people they owe money to) to repay part of what they owe. A trust deed transfers the debtors rights to the things that they own to a trustee who will sell them to pay creditors part of what is owed to them. A trust deed will normally include a contribution from income for a specified period, this is usually 36 months but can vary.
The trustee must be a qualified insolvency practitioner. Insolvency practitioners are regulated by law and must be members of an approved governing body. Independent Insolvency Practitioners fees are at their own and their licensing authority's discretion.
An ordinary trust deed is not binding on creditors unless they agree to its terms.
Protected Trust Deed
A protected trust deed is a special kind of trust deed that is binding on all creditors. Provided the debtor complies with the terms of their protected trust deed, the creditors can take no further action to pursue the debt or to make the debtor bankrupt.
A protected trust deed prevents the debtor from applying for their own bankruptcy or for a debt payment programme under the Debt Arrangement Scheme.
If a debtor acquires any new debts after they sign the trust deed, they will not be protected from action by their new creditors.
What are the consequences of signing a trust deed?
Signing a trust deed is a serious step - debtors must be sure that they understand what they are signing.
Before a debtor signs, a trustee must give them advice about the consequences and must tell them about the alternatives to a trust deed. The alternatives include a debt management plan and a Debt Payment Plan under the Debt Arrangement Scheme. The trustee must also give the debtor a copy of the Scottish Government's Debt Advice and Information Package.
Like bankruptcy, a protected trust deed is likely to affect a debtor's credit rating and may prevent them from doing some jobs. If the trust deed fails to become protected the creditors may be able to make the debtor bankrupt.
The trustee will charge for the work they do and the debtor can choose who their trustee will be. The trustee must give the debtor an indication of what they will charge before the trust deed is signed.
Free advice on trust deeds and other alternatives can be obtained from Citizens Advice Scotland or Local Authority money advisers.
Further information on trust deeds can be found in the Trust Deed Guide