Trust Deeds in Scotland help those facing insolvency to avoid bankruptcy. These agreements are a good option for debtors and creditors alike, because creditors won’t receive any money if the debtors are forced into bankruptcy. These plans are only offered to Scottish residents, although individual voluntary arrangements give similar options to those living in England, Northern Ireland or Wales.
What are these Trust Deed Agreements?
Put into place by the Insolvency Act 1986, these deeds are legally binding agreements that allow debtors to repay some of their debts. A reduced debt is negotiated, and payments are made over three to four years. At the end of this term, all included debts are then written off. The arrangements deal with unsecured debts, are are available to people whose debts on unsecured credit lines is higher than their assets. Assets include secured debt, homes and vehicles. Unsecured debt usually comes from personal loans and credit lines.
How Do They Work for Insolvency?
Scottish Trust Deeds are a legislated debt solution and set up through an Insolvency Practitioner. They will work with you to craft a proposal to your creditors, and negotiate a settlement. Because they are specially trained to help you through this process, they can also answer any questions you may have. At the first meeting, you will discuss your financial situation with the practitioner, and he or she can explain the options you may have. If you decide that a deed is the best choice, the practitioner will begin to work on a proposal agreement for you. By looking at your income and comparing it to your outgoing payments and debts, these payments are made affordable for you.
The Insolvency Practitioner then submits the proposal to your creditors. Once they agree on the settlements, you are “protected“. From the time the arrangement is signed, your creditors can no longer add to your debts through interest or fees, and they can’t contact you for additional payment. It typically takes between four and six weeks for the proposal to be drafted and negotiated, and then up to two more weeks before it can be put into effect. In most cases, these agreements last for 36 months. The payment amount is set for this three year period, and after all 36 payments have been submitted the remainder of the debt is written off.
How Will A Trust Deed Affect My Financial Standing?
The goal of these agreements is to help borrowers who are facing insolvency overcome their financial difficulties. Chances are, if you are considering entering into one of these arrangements, your financial ratings are already being damaged. By negotiating a settlement and making one payment each month toward all of your unsecured debts, you can get back on track sooner than you could if you continued to struggle with your bills.
In almost every case, a Trust Deed Scotland will be a better option than bankruptcy when considering the hit to your credit score. With bankruptcy, you could even lose your home. This is not a possibility in a trust deed. While these deeds do remain on your records for six years, your debts will be settled after three years. At this time, your records will show that your debts are paid. A good record of taking responsibility for your debts and making these payments on time will help you to rebuild your standing for obtaining loans.
Of course, there are other options, and one of them might help you recover your financial standing and stability more quickly. What is right for one situation or individual isn’t always right for another. The Insolvency Practitioner can help you determine if perhaps a debt management plan or debt arrangement scheme is a better choice to help you recover financially.
Trust deeds serve a very specific need, and may not be the right choice for every financial situation. Seeking professional advice is always a good idea. Once you are in a position to make an informed choice about your financial future, you can make a the decision that is right for you. Scottish Trust Deeds are just one way to avoid bankruptcy and begin to rebuild your credit as soon as possible.