Until recently, all of your assets had to be given to a Trustee, usually an Insolvency Practitioner, for valuation and sale if you wanted to obtain ‘Protected’ status on your Trust Deed and prevent your creditors from sequestering you. That included your home, and you would be required to either remortgage to release the equity or sell the property.
If you have equity in your property that could be released to pay off your debt, your creditors may not like the fact you have not transferred your property over. At this point, your creditors may refuse to agree to provide you with a Trust Deed.
At this point, they will be able to pursue you for any money owed and petition for your sequestration. If your Trust Deed receives a protected status, your creditors will not be able to chase you for money and can only deal directly with your Trustee.
However, at this point, you will have to transfer your property to your Trustee. They will then decide the best way is to pay your creditors. You can also consider alternative solutions.
Previously, too many homes were being forced to sale and its occupants made homeless for what amounted to little money for creditors.
A debtor’s home can be excluded from a Protected Trust Deed where it is of little value to creditors as long providing it has a mortgage or secured loan against it and the secured creditor agrees in advance not to claim under the Protected Trust Deed.
If you are not the sole owner of the property, but jointly owned, a Trustee will need the permission of the other owners.
It will also need the permission of anyone who has the right to live in the property before arranging a Trust Deed. If your co-owner(s) are not compliant and refuse permission, they have the power to force the sale through the courts. Once a ‘division and sale’ has been granted, the Trustee will sell the property and give the other owner(s) their share of the proceeds.
Your share will be used to pay what you owe to your creditors.
Trust Deed Example
Example Unsecured Debts
1 | Personal loan | £8,000 |
2 | Credit card 1 | £6,812 |
3 | Council Tax | £4,092 |
4 | HMRC Debts | £5,399 |
4 | Overpayments | £5,200 |
4 | Overdraft | £700 |
Total Owed | £30,204 |
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
60%
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here