Scottish Trust Deeds Resolve Debt Crisis

It happens to the most hardworking and dependable people: financial hardship. Though some people are embarrassed by their debt, debt is not a sign of failure. Even better, debt doesn't have to be permanent. Scottish Trust Deeds offer a manageable way to get back in the black.

The Basics

Scottish Trusts Deeds are formal arrangements made between debtors and creditors. They allow debtors to pay down their debt via a pre-arranged payment plan. They help prevent dilemmas that could affect property, or that affect mortgage. Anyone who has accumulated too much debt should strongly consider entering into one of these agreements. The benefits of renewing one's credit far outweighs having to dodge aggressive creditors, or struggling to make overwhelming payments that only pay off the interest.

How The Deed Plan Works

A licensed Insolvency Practitioner (IP) must act as the trustee between the debtor and creditor. This arrangement is only for residents of Scotland who carry more than £8,000 of debt that they cannot repay. The minimum payment plan period last forty-eight months, or four years. Alternative periods can be arranged if there is an issue with that time period, such as a low budget that requires a longer time to make payments. During this time, the debtor must pay a certain amount that will be used to pay off all the creditors. The amount paid per month varies from debtor to debtor. The monthly payments are made  into a bank account held in trust for the creditors. Once this payment period is over and if all obligations are met, a debtor will be released from any obligations as well as any remaining unsecured debts within the trust deed.

Advantages

The advantages of this program are immense:

-Payments are not hard to make because they are a reasonable amount.

-Puts an end to phone calls from creditors, as the trustee now handles all communication for the debtor.

-Creditors are prevented from taking legal action to recover their debts and must follow the terms of the trust deed, once the deed becomes enacted and thus, "protected".

-Rebuilds financial strength and future.

-Trustee payment is included in the monthly payments. The trustee fees and expenses are agreed between a debtor and creditors and if necessary, from the sale of assets.

-Only the assets of the debt owner are considered. If a spouse or parent or partner lives at the same address as the debtor, their assets remain their own, and are only considered if co-owned with the debtor.

-At the end of the deed, it is common for remaining debts to be forgiven which almost never happens if paying down credit without trustee assistance.

Disadvantages

There are a few disadvantages to enrolling in this program. Though there aren't many, they are important to consider:

-Creditors can vote against a trust deed becoming "Protected".

-The deed can affect mortgage and affect property because homeowners with equity in their homes must release equity to in order to pay down the debt. Co-owners of the property must therefore agree to this. However, this does not mean the home must be sold. Remortgaging is possible. Family members can make payments on one's behalf, as can another third party.

-Certain professional groups prevent members from signing such an agreement.

-Obtaining future credit may be difficult after enrolling in such a program. 

 

The Insolvency Act of 1986

This act affects all of the UK, but in Scotland there are some differences. In Scotland, bankruptcy is called "sequestration". There is a minimum debt for sequestration of £1,500 for the debtor application, with a minimum of £3,000 for a creditor application. In England, the fee for all applications is £750. It is a wise decision for those with great debt to consider a payment plan before sequestration, as the process saves time and money without suffering total losses. Sequestration can result in major lifestyle changes including the loss of a home or an auto, heirlooms, and more.

 

Even though it is painful to admit that one's finances have become overwhelming, these arrangements offer an affordable solution.