A Protected Trust deed can be defined as an official and legally binding agreement arrived at between a person and their creditors. Trust deeds are only obtainable in Scotland and are intended to create an arrangement with creditors whereby debts in excess of £8000 are paid back through an accredited Insolvency Practitioner acting as an individual’s Trustee. Individuals cannot make arrangements for their own Trust Deeds.
A protected Trusted Deed lasts for a span of 4 years in most cases, but longer periods can also be considered. When the 4 years expire, any outstanding debt is written off. There are some exceptions, however. It acts as your protection against creditors’ legal action, guards your car, home plus any other assets from repossession. Besides, it cuts repayments to one monthly affordable figure that is usually negotiated with your creditors and paid to the Trustee. Although the process is voluntary, it becomes legally binding the moment it is entered into.
They are not obtainable for residents of England and Wales. However, an Individual Voluntary Arrangement (IVA) can be an ideal alternative.
Requirements for Qualifying
To be eligible for Trust Deeds, you must first of all have been residing in Scotland for not less than six months. You must also hire an Insolvency Practitioner to act on your behalf. You will need to establish your finances by sitting down with your Trustee, figuring out your finances and determining your monthly repayments. After you assess your earnings and monthly expenses for instance mortgage, utilities, as well as council tax, the remainder of your earnings is reserved for repayment to creditors.
This enables the Trustee to protect you from additional legal risks, repossession of your home or arrests. However, in case there is any legal action that was taken prior to the establishment, it will still remain valid.
What the Processing of Scottish Deed Entails
When seeking for Scottish Trust Deeds, you need to firstly schedule for a consultation with a money adviser. You will have discussion so as to arrange an accurate budget dependent on your personal finances as well as circumstances. The moment you reach a reasonable and affordable monthly repayment level, Trust deeds can be created and offered to the current creditors. Depending on their nod of the submission, you may then start to move on and swap your debts with just one monthly payment.
What If a Trust Deed is Unaffordable?
In case the creditors reject the plan or you cannot meet the minimum monthly payment, you might not go ahead with the Trust Deed, but there are other options in such case. Here, the best alternative may be Sequestration (Bankruptcy) and you can be taken through the process if you want to look at this plus any additional options.
Where It is affordable
Once the document is signed, the Trustee will be in a position to share the proposal with any creditor, showing fully the figure you can pay and the amount each will receive during the Trust Deed’s life span. In addition, the Trustee will list your assets and state what will be affected.
Your creditors have a five-week period from the time a notice is published in the Register of Insolvencies to either accept or reject the document. The Trust Deed will acquire protected status if the proposal is not objected to at all, or if it meets insufficient objections to reject the proposed document. For the establishment of a Protected Deed to be objected to, the objections should either consist of most responses or represent more than one third of the total debt’s value. Creditors who do not respond to the notice are assumed to have actually accepted the proposal.