A trust deed is signed between two parties, a creditor, and a debtor. The Trust deed exists only in Scotland for the residents of the country to enable them to pay off their debts in a convenient way. It is a legal document which has legal implications for the actions of creditor and debtor. The Trust deed bounds both of them in protection based upon some terms and conditions.
The Trust deed can be applied for by talking to an Insolvency Practitioner. A debtor can apply for it if he has been a resident of Scotland for more than 4 years. In case, the deed is approved, he will be protected for a period of 4 years. During this period, the creditor is bound to five times to the debtor for payment of the debt and is not allowed to bother him or take any court action regarding the debtor’s property.
After the 4 years have passed, there can be two outcomes of trust deed:
The first one is that the debtor had abided by the rules and terms included in the trust deed. In this case, his debt is paid off and remaining amount is written off by the creditors. The amount paid has been already agreed with the Trustee and is according to the affordability of the debtor. The creditor cannot ask for more amount to be paid off.
In the second case, if the debtor fails to comply with the terms and conditions of the protected Trust deeds, he will face terrible outcome. He may get bankrupt and also he may lose his home and other property. He will be liable to face any legal action against him by his creditor.
In both cases, the name of the debtor is registered in a public register, called the Register of Insolvencies (ROI) for a certain time period and your job is affected if you apply for Trust deed.