The IVA and Bankruptcy information provided on this website relates to legal insolvency options that are available to residents of England and Wales. There are, however, similar options available only to residents of Scotland. We can help with these too.
Procedures in Scotland are different, but, broadly speaking a Trust Deed performs the function of an IVA and sequestration takes the place of bankruptcy.
A Trust deed is a legally binding voluntary arrangement (similar to the Individual Voluntary Arrangement "IVA"). It is a procedure whereby you repay your creditors over a specified period of time. It provides Scottish debtors with an alternative to sequestration (bankruptcy in England and Wales).
There are two types of trust deeds:
Trust Deeds are a formal insolvency arrangement, used only in Scotland, which voluntarily transfers your assets to a trustee. The trustee will then manage and sell your assets to pay your creditors - however they cannot take essential household items. You and the trustee are both legally bound by the terms laid down in the trust deed. Rather than this, Protected Trust Deeds may often be the better option for someone with debt problems in Scotland.
The advantage of protected trust deeds is that they stop ALL of
your creditors from chasing you for the money that you owe to
You must do the following to have a protected trust deed:
Your creditors then have 5 weeks to object in writing to your trustee. If no objections are received the trust deed automatically becomes protected.
There is no set amount of debt needed for proposing a trust
You must have a qualified and registered insolvency practitioner (an English Insolvency Practitioner can act in relation to Scottish trust deeds) who is willing to act as your trustee; you cannot ask the Accountant in Bankruptcy.
Trust deeds can contain any terms you believe that your creditors will accept. However, if you want a protected trust deed you must transfer everything you own, except household items.
The positive consequence of a protected trust deed is that it stops ALL of your creditors (even those who object) from pursuing you for the money that you owe.
Trust deeds also allow you to avoid some of the personal consequences of sequestration (bankruptcy).
The trust deed is legally binding on you and if you do not co-operate with your trustee, or comply with the terms as laid out in the trust deed, your trustee can petition for your sequestration (bankruptcy).
If you sign a trust deed, it allows any creditor to whom you owe at least £3,000 to petition for your sequestration in the 5-week period before it becomes protected. If those creditors write to your trustee and advise them that they object they have an extra week to send their sequestration petition to court.
If a property has been transferred to a trustee under the terms of a trust deed then they will be able to sell this.
If you have equity this will be taken into account and may need to be released to pay your creditors. However if you own your property with someone else, it will only be your portion of the equity that can be taken into consideration unless the co-owner agrees to release their portion of the equity and contribute this to the trust deed.
However, the property is only transferred automatically if you
intend to propose a protected trust deed. In the event that you
propose an unprotected trust deed it may be possible to withhold
some of your assets. You must always consider however whether such
a proposal will be acceptable to your creditors.
If your house is jointly owned, the trustee will require the consent of the co-owner before a sale can take place, or that of anyone who may have occupancy rights.
At the end of the Trust Deed any debt remaining will, in effect, be written off. A Trust Deed lasts for a maximum of 3 years; after this time you will be free from debt.
The rejection of your proposed trust deed would provide you with grounds for petitioning for your own sequestration as long as
(a) you owe at least £1,500 and
(b) have not be sequestrated in the past 12 months.
Please contact ClearDebt by either emailing us at: firstname.lastname@example.org or calling our information line on: freephone (from a landline) 08000 192 095.
It's also worth noting that if you have significant debts to English companies you could be eligible for an IVA so get in touch now and see if we can help you with your debt problems.
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