Scottish Trust Deeds – Are They Really A Government Debt Scheme?
A lot of people ask us is a Trust Deed a legitimate debt solution? Well to put minds at rest, here is some information below to clarify;
A Scottish Trust Deed is a formal alternative, which is used by individuals to avoid bankruptcy.
Overseen by the Accountant in Bankruptcy (Aib.gov.uk), the trust deed is a secure and formal setup used in Scotland where a debtor (a partnership or individual) accords a trust deed favouring the trustee and transfers the estate to a trustee for creditors’ benefit. Any individual keen to put in a protected trust deed application should be a Scotland resident for six months minimum before applying for this financial tool.
This could be a route for individuals facing debt problems as it safeguards the debtor from the legal enforcement usually attached to the various other types of debts. These come along with the trust deed, only after having been protected. It won’t reverse any initiative or ploy taken before the trust deed, like bank arrestment or earning, though the trustee could negotiate any lifting there is to the arrestment. Several individuals entering the trust deed arrangement could keep their properties, but the equity of the house would usually get realized to inflate the property. This is plausible via re-mortgaging or third-party buyouts. However, in certain extreme scenarios, the debtors’ house would have to be sold.
Certain trust deeds could be “protected“, which could prevent creditors from petitioning for sequestration of the debtor. The primary benefit of taking up a trust deed is that all correspondence would get forwarded to the trustee – the person responsible for handling all creditor-related communication. The court would not get involved at any point, provided the debtor cooperates with the trustee as expected.
This financial arrangement would likely lessen problems from creditors while the related charges and interest pertaining to unsecured debts (within the trust deed) are suspended (not applicable in case the debtor can make interest payment before discharge). Post 4 years, the debt remainder could be written off (4 years is the minimum now). Typically, creditors get paid with disposable income, but if that doesn’t suffice, other assets could be liquidated to add to the sum. Social security advantages and aspects such as Universal Credit could be looked into to examine your existing financial scenario. This assessment usually takes place at the time of trust deed application. However, the contribution paid back would not be removed from these funds.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here