Consultation on Trust Deeds published

Responses to the public consultation about Trust Deeds in Scotland: “Protected Trust Deeds – Improving The Process” have been published.

The consultation ran in Scotland from October 2011 until January 2012 and sought the views of stakeholders and the public on recommendations to make the current Trust Deed process more efficient and fit-for-purpose.

The aim is to help ensure that protected Trust Deeds achieve the best balance between the needs of debtors and the rights of creditors.

As a result of the consultation the Scottish Government, through Accountant in Bankruptcy (AiB), has laid out its plans to improve the Trust Deed system by making it “a more effective, viable option”.

Proposed changes to the Trust Deed system

It appears that measures will be brought forward to amend the way that Scottish trust deeds are set-up and operated in the following areas:

Home equity
Equity in the property will be calculated and frozen at the time that the Trust Deed starts so that everybody knows where they stand. A homeowner with equity will then need to contribute an amount equivalent to the equity into their Trust Deed.

Previously there was confusion as to when home equity would be measured, either at the beginning or end of the Trust Deed.

Benefit income
It will not be possible for IP’s to collect contributions to trust deeds in the future that are from benefit income. This means that if your only income is from benefits, it is lilkely that you will not be eligible to carry out a Trust Deed.

Trust Deed fees
Trust Deed fees will be partially based on a percentage of the money paid back to the creditors. This is to avoid IPs taking fees which are too high.

Do you want help to start a Trust Deed? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts

Other debt solutions in Scotland also under review

The full range of formal debt management options in Scotland is also under the microscope of the recently-closed Bankruptcy Law Reform Consultation. The outcome of that consultation may see changes to Trust Deeds (again), Bankruptcy, and the Debt Arrangement Scheme (DAS).

Apply for a Trust DeedScottish minister for energy, enterprise and tourism Fergus Ewing said: “The Scottish Government understands by enhancing the protected trust deed process to ensure that it effectively balances the needs of indebted individuals and their creditors, it will not only assist in the financial rehabilitation of individuals but will also help strengthen Scotland’s growing economy.”

James Falla, senior debt expert at Beat My Debt welcomed the news. “For too long there has been confusion surrounding the workings of the Trust Deed solution in Scotland particularly around how home equity should be dealt with” Falla said.

“These changes should make the situation of how home equity is dealt with much clearer for homeowners who are considering starting a Trust Deed and therefore easier for them to make an informed decision about whether the solution is right for them or not” Falla added.

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