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What is a Trust Deed?
Arrestment
This means that money or goods held by a third party are 'frozen'. The most common example is arrestment of funds in your bank account. The third party (e.g. a bank) may agree to hand the property (funds) over to a creditor
Bankruptcy
A form of debt relief, there are two kinds of bankruptcy:
i) Personal bankruptcy
The Scottish legal term for personal bankruptcy is sequestration. This is where an individual, sole trader or partnership is formally declared bankrupt by the court (i.e. they cannot pay their debts) and that the debts and assets of a person should transfer to an appointed trustee.
ii) Company bankruptcy
Companies can also fail and if this happens, the company is said to be insolvent. It may be made subject to liquidation, receivership or an administration order issued by the courts.
Budget
A list of all your income and expenditure and creditor details.
Credit
A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date
Creditor
A creditor is an individual or a company that is owed money by another person or sole trader (the debtor). See also regulation 2(1) of the Debt Arrangement Scheme (Scotland) Regulations 2004 (opens in a new window).
Consolidation Loan
A consolidation loan
is a larger loan (normally secured against a property) that is used to clear smaller debts into one affordable payment
Debt
Debt is any money that is owed or due to someone else or a creditor.
Debt management / Debt Management Plan
An Debt Management informal way to repay your debt using one
single affordable monthly payment, until your debt has been repaid
Trust deed
A form of debt relief where you're unable to pay your debts but have money tied up in assets,
such as a house. Creditors can agree that you give everything you own to a trustee (usually an accountant)
and sign a trust deed, which is legally binding.
The trustee offers to pay your creditors as much as possible of what you owe them from the value of your assets.
If it is a protected trust deed then the trust deed is a diligence stopper.
Default notice
This is a letter reminding a debtor that they haven't paid their debt.
This must be issued by a creditor in respect of debts covered by the Consumer Credit Act 1974 before any further action is taken.
Hire purchase (HP)
The pre-agreed purchase of an asset where the asset eg computer is in your possession as long as repayments are kept to.
Once enough payments are made, the asset becomes your (the hirers) property.
IVA
Individual Voluntary Arrangement
(IVA) is the english version of a trust deed
Protected trust deed (PTD)
A Protected Trust Deeds (PTD) is a formal way to repay your debt at a set amount over a set period of time, normally 36 months
Secured loan
A loan is secured against property (normally your House or Car) to decrease the risk taken by the lender. Mortgages and some personal loans are secured loans. If you don't maintain your repayments, your property can be at risk of repossession
Sequestration
The Scottish legal term for personal bankruptcy is sequestration. This is where an individual, sole trader or partnership is formally declared bankrupt by the court (i.e. they cannot pay their debts) and that the debts and assets of a person should transfer to an appointed trustee.
Surplus income
Sole trader
An individual proprietor of the simplest form of business, e.g. a shop owned and run by a single person.
Standing order
An instruction you give to your bank or building society to make regular payments from your account to a specific company.
This is a fixed amount unlike a direct debit which can vary and you are in control of a standing order
Trustee
Usually an accountant (a qualified insolvency practitioner), a trustee acts for
the creditors by managing the trust deed when a debtor agrees to sign over their assets into a trust deed or when they are declared bankrupt.
Unsecured creditor
A creditor who does not hold security (such as a mortgage) for money owed, eg Credit Cards, Unsecured Loans, Store Cards, Catalogues, Etc
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