Debt Advice Handbook Scotland - 1st editionChapter 6: Statutory debt solutions in Scotland7. Protected trust deeds Who can sign a trust deed
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Who can sign a trust deed
To be able to sign a trust deed and have it protected, the client must be:1s164(1) B(S)A 2016
    •a living individual; or
    •a partnership; or
    •a limited partnership; or
    •a trust; or
    •a corporate body; or
    •an unincorporated body.
Joint trust deeds are not allowed.
The client must not:2s164(2) B(S)A 2016
    •be someone whose estate has been sequestrated if the trustee in the sequestration has not been discharged;
    •be a limited company;
    •have unsecured debts under £5,000 (including interest) at the date the trust deed is granted.
 
1     s164(1) B(S)A 2016 »
2     s164(2) B(S)A 2016 »
Partnerships
Partnership trust deeds are possible. In such cases, each partner, plus the partnership as a whole, needs to sign a trust deed, it cannot all be rolled into one.
Take advice from an insolvency practitioner if this situation arises.
Consequences
The main consequence of signing a trust deed is if it does not gain protected status because of creditor objections. In this case, the client will most likely need to look at sequestration as an option. This could be particularly difficult if the client wants to exclude their family home from the trust deed as this will not be possible in sequestration.
Signing a trust deed also constitutes apparent insolvency and creditors can use this to bankrupt the client. They have a set period of five weeks in the process in which they can do this.1s177(1)(a) B(S)A 2016
The trust deed has an effect on the client’s credit file and is registered for six years after the date of signing.
It may also have an effect on your client’s employment, and you should check this is not the case before you make a recommendation.
 
1     s177(1)(a) B(S)A 2016 »