Scottish Trust Deeds – The Legislated Debt Solution
Legislation was passed in 1986 that gave residents of Scotland a new option for facing insolvency. The Scottish trust deed was established by the Insolvency Act of 1986. These legally-binding financial agreements were designed to help prevent having to file for sequestration, sometimes called bankruptcy.
How Do I Qualify?
There are a few specific criteria one must meet in order to qualify for a trust deed in Scotland. First, he or she must live in Scotland. The settlements are available to both tenants and homeowners. In addition, those who live rent-free with relatives may also qualify. In most cases, the minimum debt considered is at least £4000 in unsecured debt. In addition, there typically has to be more than one creditor involved. Finally, the debtor has to have some surplus income. This means that the cost of living and payments on secured loans cannot be more than the income.
Fortunately, there is no credit search necessary before one of these agreements. This means even those with already-damaged financial ratings can qualify. It is important to note, though, that there are employment-related limits in some cases. Some businesses – primarily public bodies, banks and financial institutions – do not allow their employees to enter into this type of credit arrangement. You could lose your job if you don’t check the terms and conditions set forth by your employer first.
How Do I Get Started?
If you think you may be a candidate for a Scottish Trust Deed, the best place to start is to seek a professional opinion. Trust deeds and other types of legal debt help can come with serious consequences if you cannot make your payments. They can also have serious implications on your financial stability and well-being in the future. There are alternatives you may want to consider before deciding if this type of arrangement is the best choice for you. These may include the less formal debt arrangement scheme or a debt management plan. A professional – either from a financial charity or a representative recommended by the Accountant in Bankruptcy – can work with you to determine which is best for your individual financial situation, and which can give you the best possible financial future.
What Is A Scottish Trust Deed?
These trust deeds negotiate a settlement with creditors and put an affordable payment plan into effect. When Scottish residents are struggling financially due to outstanding loans and high credit card payments, these payment arrangements give them another option. Sequestration could cost them to lose their homes, and other assets paid for through secured debts. These settlements help them to avoid having to face that possibility. For people whose income to debt ratio show that they will be unable to repay their debts on time and in full, looking into an arrangement may be a good way to get their credit back on track.
How Do They Work?
Trust deeds are administered by an Insolvency Practitioner. This practitioner becomes the trustee of the agreement after it is signed. The deeds are legally binding, and it is important that the payments are set at a reasonable level the debtor can afford. For this reason, the first step in filing for a deed is an assessment of the current financial situation. This is done by the practitioner, who determines how much could be paid toward unsecured debts each month.
Because these agreements last for 36 months, that payment is divided between the creditors and then multiplied by 36. Then, the practitioner proposes these totals to the creditors. The creditors can negotiate, or accept the offer. After the agreement is signed, only a single payment is paid each month. The creditors can no longer contact the borrowers, or charge any additional fees or interest. In this way, the arrangement protects the borrower. Monthly payments are sent to the practitioner, now serving as the trustee of the deed. The trustee is responsible for distributing the money to the creditors each month. After the three years are over, the debts are considered paid. Any remaining debts are written off.