Trust Deeds (Scotland only) What is a Trust Deed?

A trust deed is a formal arrangement with your creditors, used in Scotland where a debtor grants a deed in favour of the trustee which transfers their assets to the trustee for the benefit of creditors.

Provided certain conditions are met, the Trust Deed may be registered as "protected", thereby preventing creditors from petitioning for the debtor’s sequestration or taking any other steps to recover debts due to them. Financial and personal circumstances vary, so the consequences of signing a Trust Deed will be different for each individual or partnership.

What are the advantages?

• It takes the pressure off as all correspondence and queries from creditors are dealt with by the Trustee.
• It puts the debtor rather than creditors in control of the debtor’s financial situation and reduces the costs – a trust Deed is usually more flexible and less costly to administer than sequestration and allows the debtor the right to fulfil certain public offices - which would not be the case with sequestration.

And the disadvantages?

• Existing arrestments and other diligence continue to be effective
• Home owners may be forced to sell if creditors cannot be paid in full from other sources
• Debtors cannot trade on their own account or hold directorships of a limited company.

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