SHOULD I ENTER INTO A SCOTTISH TRUST DEED?
A Trust Deed is an elective agreement between you and your creditor. When a debt becomes too heavy a burden to carry, this may be an option worth considering. Each year, thousands of Scottish citizens choose to deal with serious credit issues by filing
Simply put, when you are not able to pay your debts in full and your creditors are willing to settle for partial recovery, then an STD may be a workable solution. The arrangement needs to be handled by an insolvency practitioner, who is usually a specialised accountant. Before proceeding keep in mind, like bankruptcy, this is a form of insolvency and there are implications.
Controlling Finances
A possible alternative to insolvency is a debt management plan. A specialised company will sit down with you and calculate all income available and all expenses, including outlays for affordable leisure activities. When expenses are subtracted from income, what is left is disposable income. Your disposable income is used to set-up a plan. Your credit management company will contact all creditors and present an affordable repayment proposal. On a monthly basis, you turn over your disposable income to your credit management company, and they in turn send the agreed upon amount to each creditor. Keep in mind creditors are under no obligation to accept the rescheduled payment offer.
When in financial difficulty, there are many excellent reasons to choose to manage you debt with professional help. In a formal insolvency you risk losing all your assets, including your home. Furthermore, since a debt plan can be renegotiated at any time, it offers flexibility. A promotion at work, the sale of a house or a bonus payment are examples of positive changes that may allow for quicker future debt repayment. Another point to consider is that insolvency can affect your status as a professional. Additionally, many people will do whatever they can to avoid insolvency on ethical grounds, and want to repay every penny they owe.
A plan for managing debt offers no assurances that interest and services charges will stop. Fees paid to a debt management company increase what you owe. In addition, a debt management plan affects your ability to obtain future credit. Your proposal will not be a legal document, but a Scottish Trust Deed other procedures are enforceable by law.
Insolvency Procedures
You need to have your Trust Deed protected. Once it is protected, none of your credits can apply legal recourse to recover debts. To protect it, you must publish an advertisement in the Edinburgh Gazette. This is done to inform creditors who may not be aware of your situation. The announcement gives details of what you have proposed. Five weeks after publication it is protected, unless a credit comes forth and offers an objection.
Scottish Trust Deeds, although a solution to a personal debt crisis, should be considered only after all other alternatives are taken into consideration. For creditors, if it is arranged fairly, it gives a better return than a bankruptcy. Although it is a section of the Bankruptcy Scotland Act 1985, and a trustee handles both, on close examination there are many differences. Even though a deed of trust is listed as insolvency on the public register, as a voluntary arrangement, personal finances are not looked at as closely as in a bankruptcy proceeding. This means that you will have fewer restrictions place on you than would be in effect if you were in bankruptcy.
In a bankruptcy the trustee can report questionable activities to the Accountant in Bankruptcy, which could result in an application to the Sheriff requesting a Bankruptcy Restriction Order, which is a court order against you that can mean restriction could continue for up to fifteen years. The bottom line, trusts are voluntary, a bankruptcy may not be. For a creditor, a deed of trust generally offers a better return.
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