Scottish Trust Deeds Should Be Great For Coping With Debt

If you are living in Scotland and have take on too much debt

, and if you now cannot pay it all back then you may be looking at Scottish Trust Deeds. A trust deed is where the debtor and creditor have agreed an alternative payment plan. It is voluntary on both sides, and means that part of the debt will have to be paid back.

A trust deed has to be set up by an independent advisor called a trustee. They put together the whole agreement, and then when it has been agreed to by both sides they will deal with the day to day managing. This trustee cannot be just anyone but has to be proper insolvency practitioner who is in turn regulated by the law and their own society.

It works by setting out the monthly payments that will be made to the creditor. It is for a set period of time, after which the rest of the debt is cancelled. It can only be used if the person in debt cannot meet the minimum monthly payments.

A person considering setting up a trust deed would have to give all their financial details to the trustee. They would have to give details of the amount owed, and the amount that they think they can afford every month. They would also have to give details of all other relevant information such as other debts, rent or mortgage.

The trust deed can cover more than one creditor as long as they are all set up at the same time. Once the trustee has all the details they will work out what the debtor can afford. They will then contact all the lenders on their behalf to see if they are amenable to the new payment scheme.

This removes all the stress from the debtor. The trustee will deal with any correspondence from that point on. It is not as bad as being declared bankrupt and no one needs to know. It can affect certain professions and certain positions of office although some may be unaffected. A trustee can advise on this.

Once all the creditors have agreed to the new terms then the trust deed is said to become protected. This means that the terms cannot be altered by the creditors, and once the three years is up then they will not be able to get any more money towards the debt. It is effectively cancelled. It is the debtors responsibility to agree to all the terms and to ensure that the monthly payments are met. They must not take on any more credit during this period. They will also have to declare any unexpected cash lump sums that they may receive.

It is quite likely to affect any property that is owned by the debtor, as the lenders will expect to have the right to claim any equity. If the debtor is in this position then this may not be a good idea for them. They should get specialist advice from somewhere like Debt help Scotland as to the alternatives to Scottish trust deeds. Any decision to take out one of these trust deeds should involve a lot of thought and discussion with a professional as they are very serious and can affect quite a lot of things in a persons life.

by: Kenneth smith.

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