A trust deed functions much the same way in Scotland as an Individual Voluntary Agreement does in rest of the UK. People in dire financial straits can use this legal remedy to fulfill their obligations without the harsh terms so common in a bankruptcy. Of course, it is not without its downsides and not everyone can avail of this deal. Those who qualify for must think long and hard as to whether they are prepared to accept the consequences and perform their obligations for the duration of the agreement. The following are just some of the effects of a Scottish trust deed:
Being in debt can be a harrowing experience. Plenty of creditors employ bullying tactics to force debtors to pay them back. This includes the sending of letters from a corporate lawyer threatening legal action if the recipient does not settle the payment before a strict deadline. Should written communication prove unsuccessful, this may be followed up by representatives constantly calling on the phone. In extreme cases, the issue is truly brought to the court for a decision. Trust deeds, once protected, will shield debtors from further harassment and all pending legal actions will stop although those which are already in force may not.
Individuals will have to make monthly payments to the best of their abilities. A trustee will assess their financial capability and determine a suitable amount that can be reasonably maintained throughout the four years or so that the settlement is in place. Any unexpected windfall must be reported, just like changes in circumstances that might merit a reassessment. The minimum amount is typically pegged at £100 but the actual figure can vary widely depending on the situation. Whatever the case, the total sum is likely to be much lower than the borrowed amount. Creditors allow this to happen only because they are at least certain to recover a portion instead of coming away empty-handed.
Sequestration is the primary reason why people dread bankruptcy. Nobody wants to lose their home and disrupt the lives of the entire family or part with the car and heirloom pieces. With a trust deed Scotland residents do not have to suffer the loss of their most valuable assets. The payment for their debts will come from their income and only a reasonable amount will be taken to allow them to live in some comfort. If there is equity in their home, then additional payments may have to be negotiated so that they can keep it.
Incurring a debt that has grown too large to repay in full will always have consequences. Getting a trust deed will not prevent a person from having his credit rating significantly diminished. This will severely limit the ability to borrow money from lending institutions during and after the agreement. The rating will have to be restored to a respectable level through a series of confidence-building measures. This includes the acquisition of small loans and paying the dues on time to win back trust.
The Scottish trust deed is a welcome alternative for many distressed residents who wish to put things in order and start over again. The majority of creditors must give their nod to it before it can proceed. It is not an agreement that allows people to escape their responsibilities but a serious pact with strict rules and lasting effects that will have to be faced head on.
For a Scottish debtor looking to settle his/ her affordable debts with a trust deed Scotland has insolvency laws and institutions that can help with this quest. A Scottish trust deed is a legal binding document between a debtor and his/ her creditors. The deed must be prepared with the legal help of a trustee (professional financial adviser or insolvency practitioner), and must clearly indicate that the debtor is unable to afford payments of his debts through the sale of his properties or incomes. It must, also, clarify that the presented arrangement (regular payments to be made within a span of four years) is the only affordable way the debtor has of repaying at least part of his debts.
Why use trust deeds to settle unrepayable debts?
Unsecured loans that exceed £5000, and whose repayment deadline has passed, tend to grow rapidly to a point of getting out of hand. In most cases, these loans have high interest rates imposed by creditors to hedge against the risk of failed repayment and, hence, losses that emanate from lack of collateral. The high interest rates can escalate when repayment deadline passes; making the debt almost impossible to settle. Trust deeds can, then, be drafted and presented to the creditors, who might jump to the idea to avoid losing all their funds, for approval. The debtor makes as much payment as he can afford within a period of four years (48 months) towards his debt repayment, and after this period, the creditors forgive the remaining debt. This arrangement (the deed) gives debtors a way out of their debts without their having to declare bankruptcy.
Trustdeeds.net is one of the many websites that provides Scottish residents information regarding these deeds. Other resources include trust-deed, aib.gov.uk/Services/ptd and jubilee2000uk.org/scottish-debt-solutions/a-guide-to-scottish-trust-deeds-in-the-uk. In addition to trust deed information, trustdeeds.net provides Scottish debtors a telephone contact (0800 193 1024) which they can call in 24/7/365 for assistance regarding their debt situation and deed arrangements. The website also answers frequently asked questions regarding who can qualify for these deed arrangements and who cannot.
Nullification of deeds
A Scottish trust deed can be nullified for several reasons. If and when a debtor or creditor dies, the deed ceases to be binding. A deed can also be nullified if and when the debtor does not make the agreed payments within the set time frame. In most cases, late payments may be allowed when there are valid reasons and future plans to make up for those payments. However, if and when the debtor completely fails to make the payments, the deed is nullified. At this point, the deed can no longer protect the debtor from his creditors, and they (creditors) can use any channel to collect their funds from the debtor. The debtor may also be subject to litigation to pay off the trustee's funds.
A Scottish debtor can get out of financially crippling debts through a Scottish trust deed. This deed is a legally binding document that forces the debtor to make the proposed payments on time, for the entire period of the deed (four years). The deed also prevents creditors from pursuing the debtor for the recovery of their funds. A successful deed is one that the debtor succeeds in making all the payment within the deed's life, and, therefore, getting absolved of the remaining debt. An unsuccessful deed is one that terminates before the end of its four years span as a result of the debtor failing to make the agreed payments. Creditors can press charges against the debtor, in a court of law, to recover their funds, if the deed becomes nullified.
There are many trust deed Scotland laws, companies, websites and insolvency practitioners (IPs) that assist people get rid of debts through these deeds. Trust deeds are signed agreements between a debtor and his/ her creditors that stipulates the terms of debt repayment. The deeds are supervised by a legally-recognized insolvency practitioner, trustee, and they clearly define the payments schedule and amounts that a debtor should pay within a specified time to pay off his debts. As much these deeds must be prepared by the debtor and approved by his/ her creditors, the plans are executed through IPs as required by the law. An IP or financial professional overseeing to the compliance of the deed is referred to as the trustee of the deed. All payments must be made to the trustee for distribution to the creditors. The trustee must file the deed according to the Scottish insolvency laws.
The Office of Fair Trading, debtors, creditors and insolvency practitioners/ trustees comprise the key parties of a trust deed. More often than not, debtors find themselves in higher debt amounts that cannot be paid off by their (debtors) assets and revenues. In such events, they (debtors) may need alternatives to paying off the debt in full. The Office of Fair Trading in Scotland allows debtors, who have no sufficient means of paying off their debts, to enter into arrangements that allow them to pay only as much of their debts as they can afford within a stipulated time. At the end of the deed period, remaining debts are erased. The Office of Fair Trading not only protects these debtors, but also ensures that creditors do not lose all their funds/ resources to irresponsible debtors.
Debtors must have a financial assessment done and verified by a financial adviser or an insolvency practitioner. The results of the assessment must proof that the debtor' assets and revenues cannot pay off the debt regardless of the debtor's efforts and good will to do so. A debtor is allowed to prepare, with the help of an IP, a debt repayment plan that allows him/ her to pay off only as much as he can afford. This debt repayment plan might require the debtor to disclose and hand over his assets to the trustee for conversion into cash, or protection from seizure by creditors. All available savings in the future must be channelled towards debt repayment, and are given to the trustee for distribution. The trustee makes agreed payments to the creditors as long as the debtor makes the contributions. He (the debtor) is absolved of the remaining debt and the creditors go away with whatever payments the debtor could afford once the deed expires.
There are many online sources of trust deed information including trustdeeds.net. On many of these websites, people can find information on trust deed definition, how to go about applying for the deeds, requirements for deed application and qualification, as well as names and contacts of insolvency professionals/ deed trustees. Such websites also offer debtors advice on other financial aspects.
With the availability of trust deed Scotland debtors can work affordable plans to eliminate their debts for good. Scottish trust deeds are supervised by trustees. Debtors must abide by all the terms of the deeds including making the agreed payment amount at the stipulated time, and creditors must refrain from harassing the debtor as long as the deed is valid. A debtor who honours the deed to the end becomes debt free as the remaining debt is erased. Debtors may be sued by creditors and the deed's trustees for failing to honour the deed.