Protected Scottish Trust Deeds are a contractual and legal arrangement between a debtor and their creditors to repay debts at a reduced rate over a reduced period.
To qualify for Protected Scottish Trust Deeds the debtor must be “insolvent”. This generally means that the debtor’s unsecured debts outweigh their assets (often equity held in their home) and that they are unable to repay their debts when they fall due.
Protected Scottish Trust Deeds are often used to protect an individual from their creditors and the risk that they might be sequestrated (bankrupted). It can help to protect assets (such as a home).
To qualify for a Protected Trust Deed you will need more than £5000 of qualifying unsecured debts. You would normally need to be in a position to repay £100 per month or more towards the debts for the duration of the Protected Scottish Trust Deed (which is usually a minimum of four years). These figures are guidelines and every case is different. Please contact us to discuss your case as a Protected Scottish Trust Deeds may be possible in certain circumstances even if these criteria cannot be met.
Some people are able to introduce lump-sums into Scottish Trust Deeds. This might be from the sale of an asset or a contribution from another person. In such cases a different type of Trust Deed might be possible whereby the lump sum serves as an alternative to making contributions over a period of years.
If you have assets they will be taken into account. For example if there is equity in your home you may be required to release some equity during the term (for example by re-mortgaging) to help repay the creditors. Even if you cannot re-mortgage you will still be required to raise the money by other means.
You will need to secure the services of a Licenced Insolvency Practitioner to work with you on your Trust Deed proposal. It is their job to work with you to establish a fair level of repayment to creditors and to seek the agreement of your creditors to such an arrangement. You can find a list of Scottish trust deeds companies and experts to answer your questions at www.Trust-Deed.co.uk. The online forum where you can seek debt advice or raise queries about existing protected trust deeds is at:
Generally if two thirds of your creditors agree to the proposal (or fail to object to it) the Scottish Trust Deed will become a Protected Trust Deed. This gives you protection against any further recovery activity on the debts. Creditors are not compelled to accept the terms of your trust deed proposals.
Provided that you meet the commitments made in your successful Protected Scottish Trust Deed proposal you will no longer be liable for any remaining debt once you have completed your obligations and have been granted your discharge.
The avoidance of bankruptcy, protection of the home, and defined period of repayment are all major advantages of Scottish Trust Deeds.
The selection of a good Licenced Insolvency Practitioner is vitally important. As with all businesses the quality of service varies greatly between firms. Should you wish the site support team can guide you towards an Insolvency Practitioner who specialises in cases similar to yours and who has received excellent client and professional feedback in the past.
We suggest that you visit Trust-Deed.co.uk which is connected to this website. At this site there is further information on Protected Trust Deeds and a forum where you can anonymously ask respected Scottish debt professionals any question you might have. The firms supplying the experts to this forum have received great feedback from previous clients.
Anyone entering into a Trust Deed should clarify carefully with the Licenced Insolvency Practitioner the implications for their home. While it appears a significant amount of your debts may be written off you may find in reality these unsecured debts are in part transferred into secured debt on your home (via an increased mortgage) which could take many extra years to repay. We suggest that you demand that the position regarding your home be put in writing to you before you sign the Scottish Trust Deed itself.
If it is possible to obtain an increased mortgage during a trust deed, homeowners may be required to do so in order to release money to help repay their creditors. A mortgage obtained during a trust deed is likely to be on less favourable terms than might otherwise be achieved (for example the interest rates may be higher). If a homeowner with equity is unable to re-mortgage during their trust deed, and the money cannot be raised by other means, their home may be at risk of being sold to release the equity.
Your expenditure during a protected trust deed will be restricted in order that you can pay what you can reasonably afford towards your debts. Only unsecured debts included in a trust deed will be written off at the end of the process. If your trust deed fails you may become bankrupt.
When you cease making payments directly to your creditors you are likely to fall into arrears or your arrears may increase.
Only the unsecured debts that exist on the date that you sign your trust deed will be incorporated into the arrangement. You will remain liable for any other debts that you incur.
Scottish Trust Deeds also have a very significant effect on a credit record which is likely to be similar to bankruptcy. Any previous Scottish Trust Deed may also need to be declared on mortgage applications for many years after the Scottish Trust Deed is completed even if it is no longer visible on a credit record. A public register of trust deeds is kept. Your details will remain on this register for a period of one year following the discharge of your trustee.
For further details about Trust Deed fees and the work that is conducted Click Here .
Warning: If your Trust Deed fails you will remain liable for the balance of your debt and any insolvency practitioner fees and costs incurred.