What is a Trust Deed?
A Trust Deed provides the debtor with a more practical alternative to Bankruptcy. It is a legally binding arrangement between you and you creditors, where you pay back a set amount over a fixed term, commonly over three years. The debtor only pays back what they can realistically afford and any unpaid debt is written off on completion of the Trust Deed. A Trust Deed is Scottish legislation only, and the rest of the UK is serviced by IVA.
A Trust Deed is a document used to secure the repayment of a loan of money usually from a lending institution such as a bank or credit union. To make sure that the lending institution will get back the money it lends, it records the Trust Deed on the title to the property. This does not mean that the lender owns the house. A Trust Deed, when recorded, serves as notice to everyone that the lenders has financial interest in the property. The Trust Deed acts as collateral to insure that the lender will be repaid.
A Trust Deed is a solution to debt and a real alternative to Bankruptcy. Basically it is an arrangement between you and your creditors, usually over three years. At the end of a Trust Deed the balance of any unpaid debts is written off. Under legislation, once protected a Trust Deed is legally binding on all your unsecured creditors. The terms of your Trust Deed are tailored to your own personal circumstances. If your creditors do not object to the Trust Deed it will become protected and therefore binding on all your unsecured creditors.
A “trust deed” is a deed to the property which is given to an independent third party who both the borrower and lender instruct what to do in the event of the payoff of the property or a default. The trusted person (“Trustee”) is, nowadays, virtually never a natural person, but a corporate trustee which literally holds the deed in trust. Upon payoff of the note, the trustee is instructed to record a document called a “Reconveyance” which literally “reconveys” the deed back to the borrower payoff of the loan. On the other hand, in the event of a default, the trustee is instructed to take the proper legal steps towards foreclosure of the property on behalf of the lender.
