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 Deeds A 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 Deeds There 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 Offers There 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 Cons As 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 Agreement There 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.
