Trust Deeds in Scotland Are One Solution To Debt Problems

Financial trouble can happen when least expected. It may be due to the loss of a job, medical emergencies, or some other catastrophic event. It may be due to unwise financial decisions, or poor money management. Whatever the case, it is not a pleasant situation to be in. The situation is not necessarily without solution. Trust Deeds in Scotland may be the answer. They are helpful for a number of reasons. They give a deadline for becoming debt free, they give relief from harassment by creditors, and they allow a fresh start.

Definition of Scottish Trust DeedsA trust deed is an agreement with creditors to repay a certain amount monthly for 36 months. At the end of that time, all debts are absolved. No more can be collected, even if more than 50% is still owed. Assets will be turned over to a trustee, who will liquidate them and distribute proceeds to creditors. Essentials such as the home and personal belongings will be exempt.

Reasons for Using Trust DeedsThere are three important reasons for taking advantage of this arrangement. One reason is to avoid sequestration and losing assets. Though it might not be an ideal solution, it could be the only one. A second reason is to get relief from oppression by creditors. Though these two reasons are important, the third reason is probably the most important. It gives a means and a time line for becoming debt free. It may be the only way to entirely absolve all debts and get a new start. This is possibly the best debt help Scotland has to offer.

Types of Trust Deeds Scotland OffersThere are two types of deeds with very little difference between them. Basically, the only difference is that the protected deed is legally binding and the other is only binding when all creditors agree. Either one serves to as an excellent tool to get out of debt effectively.

Pros and ConsAs with anything else, there are pros and cons. There are very few negatives and they are minimal. The situation is probably already as negative as the agreement would be. The relief obtained probably outweighs any negatives.

Pros include the following;

• There is a definite end in sight. In 36 months, the debt is gone
• Up to 90% of debt may be written off. As it is a legal government arrangement, creditors must abide by it
• There is no fee to set it up and no further accumulation of interest or charges. This means no more debt accumulation
• There can be no further legal action taken once the agreement is set up
• It instantly reduces monthly outgo to a minimum

Cons include a damaged credit record. However, that has already happened due to the difficulties experienced. There may be a period of time after absolution of all debts when no further credit can be obtained. Again, that is probably already a fact. The most distressing con is that certain jobs require credit approval, which probably happened way before this time anyway.

Important Considerations Before Entering Into an AgreementThere are some things to consider before deciding on this course of action. Ask lots of questions before deciding on an Insolvency Practitioner or company. The amount of work involved in negotiating with debtors means that there can be no "trial run." That makes it very important to get the proper match.

There can be no new debt added after the agreement is entered into. The lifestyle will have to remain stable for at least 36 months. What might be considered needs may have to be relegated to wants for a time. If the agreement fails, sequestration is highly likely, as creditors fear losing their investments.

Any income increases or decreases need to be reported to the trustee immediately so that payments can be adjusted accordingly. Also, any inheritances, large gifts, or other financial acquisitions will need to be turned over to the trustee to distribute to creditors.