Scotland being one of the devolved countries here in the UK, has their own government, and also their own set of insolvency laws, and options to get out of debt.

Along with Debt Management Plans and token payment plans, in Scotland they also have what is termed a Protected Deed Trust.

If you know what an IVA/Individual Voluntary Arrangement here in England, Wales and Northern Ireland is, you can think of a Trust Deed in a similar fashion.

And just like an IVA, it is a form of insolvency.

There are some requirements in order to do a Trust Deed:

In essence a Trust Deed similar to an IVA is a way to repay your debts in a manner you can afford.

Trust Deeds are set-up and administered by Insolvency Practitioners, just like IVA’s, and you make the monthly payments for a period of four (4) years, not five (5) years like an IVA.

Proposals are sent to your creditors, and as long as the majority of your creditors, or those with the majority of your debt agree, the Trust Deed is then said to be Protected, and binding to all your creditor.

After the 4 years, any remaining balances are written off.

As a Trust Deed is a form of insolvency, it may affect your job depending what your career is, and it will also affect your credit.

If for any reason you fail to complete the Trust Deed, or it fails due to no payments, you could be made bankrupt, which in Scotland is Sequestration.

What is Sequestration?

Sequestration is the Scottish term and version of bankruptcy here in England.

You can do Sequestration yourself, or a creditor can do this. In the past a creditor could make you bankrupt in Scotland if you owed them £3,000 or more, that has temporarily been raised to £10,000, due to the Covid pandemic.

The process is once again similar to Bankruptcy in England.

You file for Sequestration, and a Trustee is appointed, which is similar to an Official Reciver in England.

The Trustee’s job is to review your finances and see if you have any assets that can be sold to pay towards your creditors, and also if you have any surplus income after your allowed living expenses.

If you can afford to pay anything into the Sequestration, you will be required to do this for a period of four (4) years.

In some instances if you are not required to pay into the Sequestration, you can be discharged as quickly as six (6) months. However, it will stay on your credit file for a period of six (6) years.

As with any form of insolvency, Trust Deeds and Sequestration require you get professional advice as to what is best for you and your set of circumstances.

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