Available to residents of Scotland, trust deeds are a bankruptcy alternative to helping people get a handle on unsecured debt. This type of insolvency procedure typically lasts about four years.
Clients make monthly payments to a trustee who then distributes monies to the appropriate creditors. A trust deed agreement is designed according to the client’s budget. You are expected to make one singular monthly payment to resolve outstanding unsecured debts. Find out more in this article: What is a Trust Deed?
Is a trust deed agreement the right insolvency solution for you and your family?
Eligibility for a trust deed agreement first requires the client to be a resident of Scotland. Unsecured debt must total at least 5,000 pounds, and a licensed insolvency practitioner is required to carry out the legal agreement. You must also be able to meet the monthly payment obligation to the trustee.
If you are having a difficult time meeting your monthly obligations, sit down with a licensed practitioner for a consultation. List your assets and consider what type of monthly contribution you are able to make to the trust deed. Remember that under a trust deed agreement, your assets are under the control of the trustee, who in this case is the practitioner.
Do you have equity in your home? Homeowners are often required to provide this information. The trustee is going to look over all income and expenses to arrive at the proper amount for your monthly contribution to the trust deed. All living essentials are covered first to ensure that the trust deed agreement is a viable solution for both the client and the creditors.
Scotland Debt Solutions
At Carrington Dean, we make sure our clients are no longer hassled by creditors. We handle the responsibility of conversing with creditors and keep them informed. Once your creditors know that you have entered into a trust deed, they will leave you alone and communicate only with us, the trustee.
Trust Deed Protection
Trust deeds must be protected so that interest is not able to be added to the total amount owed. Not only that, but protected trust deeds prevent creditors from seeking legal action against you in the midst of a settlement. If enough creditors agree to the trust deed, then it will be a protected agreement. Understand, however, that there are instances where trust deeds end up being unprotected for various reasons.
You want at minimum half of your creditors to agree with the trust deed proposal. Does any one creditor hold more than a third of your total unsecured debt? Are there limitations to what types of debt can be included in a trust deed agreement?
A licensed practitioner will help answer all your questions and evaluate your debt situation. Trust deed debts can include loans, credit card debt, overdraft payments, and more. It is important to note that secured loans, including mortgages, are not to be included in trust deeds. The same goes for hire purchase agreements. Any debt not included, however, is going to be part of your calculated costs for essential living. This makes trust deed agreements one of the most viable insolvency options for clients struggling with personal debt.
The End Game
When entering into a trust deed agreement, it is important to consider the end game. What happens if you are unable to pay off the entire amount owed? Any debt remaining is written off. Make no mistake about it that creditors do not enter into these agreements blindly. They know what to expect, and they know once the agreement comes to an end, there is nothing they can do to recoup any more monies owed.
The term of a trust deed lasts up to four years, but it will be listed on your credit report for six years. It will have an impact on your ability to borrow using credit, so this is something to consider if you are looking to enter into a trust deed agreement with creditors.