Facing Financial Difficulties? Consider a Scottish Trust Deed
In today's troubled economy, many struggle to pay their monthly bills. More people than ever before are facing debt collectors, credit problems, repayment difficulties, and losing the things they have worked their whole lives to obtain. There are several options to pursue once the debt is more than can be paid by the person owing it. In order to avoid loss of property, mode of transportation, and even housing, residents of Scotland have the option of pursuing a Trust Deed.
Often the first choice of someone facing financial difficulties is to enter into a repayment agreement with the companies they owe money to. The problem with a verbal agreement is that a company may decide halfway through the repayment process that they want the full amount owed to them immediately. Without a signed contract, there is nothing to prevent them filing to seize assets in order to obtain what is due.
A Scottish Trust Deed is a written agreement, made between the debtor and the creditors, and mediated by an Insolvency Practitioner and then a Trustee. Similar to an IVA Arrangement, The period of repayment for a Protected Trust Deed is three years. Any assets the debtor holds, including equity in a home, are added to the disposable income after living expenses when determining the amount of the monthly payment. Once the three-year Trust Deed repayment period is over, all remaining funds owed to the creditors are erased and the debts are considered paid in full.
There are several areas in which a Trust Deed has an advantage over both bankruptcy and Sequestration. The biggest benefit is that both during and after the period of repayment, all listed creditors are prevented from contacting you in an attempt to obtain more money, regardless of whether or not they approved of the plan. As long as the payment plan is fulfilled, the debt owed will be released after only a portion of the full amount owed has been paid. In most cases, the debtor’s home and car may be kept, although an expensive car may need to be downsized in order to free up funds for repayment. Another benefit involves having interest payments on outstanding debts frozen during the three-year period. Continuing to accrue interest while making payments can, in effect, drastically increase the amount of time it takes to pay off a bill. Finally, there is the knowledge that one no longer has to deal directly with creditors regarding an outstanding balance. These advantages can far outweigh any potential negative consequences of applying for a Protected Trust Deed.
There are a few drawbacks that should be considered before contacting an Insolvency Practitioner to negotiate a plan. Some companies do not allow their employees to enter in to a Trust Deed Scotland while working for them. These people may have to choose between continuing their employment and finding another job that will allow them to repay their debts in a reasonable amount of time. Credit ratings are negatively affected for six years after entering into a Trust Deed, but this is better than going through bankruptcy or Sequestration. Any equity in a home or property can be used to help make the payments; releasing these assets may require a remortgage. A client’s income will be routinely evaluated and the monthly payments can be adjusted to reflect increases or decreases of more than a minimal amount.
When a Scottish Trust Deed is registered for protection it will be published in the Edinburgh Gazette, which is a public record. There is a small possibility this situation will be discovered by people who know the debtor if they read the Gazette and are looking through the Trust Deed announcements. These potential disadvantages should be weighed against the need to overcome the debt when making the decision for or against entering into such an agreement.
A Trust Deed Scotland can help clear the way for a person in debt beyond their ability to completely repay it; however, a few steps need to be taken to assure this situation does not repeat itself. Careful attention needs to be paid to the budget, and paying bills on time so that things don't get out of hand is imperative. It is important to keep from accruing additional debt once the outstanding amount is settled. It may take time to establish healthy new spending habits, but, in order to maintain a positive balance in one's financial life, staying ahead of the game is crucial. Trust Deeds are a tool that only work if care is taken not to fall into the same predicament again.