People living in Scotland who have problems with unsecured debts have a number of options to become debt free. One way in which people can solve their debt problems is with a Scottish Trust Deed.
What are Scottish Trust Deeds?
A Trust Deed is a formal arrangement for Scottish residents to consolidate and clear their unsecured debts. In the arrangement debts are restructured to be paid back at an affordable rate over a fixed period of time. Generally the Trust Deed will last for a period of 36 months at the end of which creditors will agree to write off any remaining unpaid debt. A person entering into a Trust Deed will make a single regular monthly payment. This payment is then distributed to the creditors on a pro rata basis. The actual amount of the payment is calculated according to what the debtor can reasonably afford based on their current income and expenditure.
What are the benefits of Trust Deeds?
As a solution to overwhelming debt problems a Trust Deed offers a number of advantages. Since debts are consolidated into an affordable payment the debtor will no longer struggle to keep up with their repayments. With the arrangement lasting for a fixed period of time they will also know exactly when they will become debt free. Once the deed comes into effect all interest and charges relating to the debt are stopped and creditors won’t be able to take any further legal action to recover the debt. On completion of the agreement any remaining unpaid debt is written off.
How can a Trust Deed be arranged?
Scottish Trust Deeds can only be arranged and managed by an Insolvency Practitioner who is licensed to operate in Scotland. It is the responsibility of the Insolvency Practitioner to gather all the relevant information about the debtor’s income, expenditure and money owed. They will then draft a proposal based on this information for the creditors to approve or reject. Under Scottish law Trust Deeds are automatically confirmed unless a majority of creditors object to the proposal in writing within five weeks. Once accepted the proposal becomes known as a Protected Trust Deed.
What are the qualifying criteria?
Trust Deeds aren’t suitable for everyone and to qualify the debtor will need to meet certain criteria. Generally to be appropriate there will need to be outstanding debts of at least £8000 owed to two or more separate creditors. They will also need to be in permanent employment and have sufficient disposable income to be able to keep up with the monthly repayments.
