Scottish Residents
PROTECTED TRUST DEEDS
A Protected Trust Deed is a less formal way of dealing with debt problems. It is a legally binding agreement by which your assets are transferred to the Insolvency Practitioner (Trustee) to administer and realise for the benefit of the creditors. There are no court processes involved and less restrictions on you. If the trust deed meets certain basic requirements, it can be registered as protected and this then becomes binding on all the creditors. A trust deed will normally last for a period of 3 years at which time you are discharged from any remaining debt. In many instances a percentage of your debt will be written off.
ADVANTAGES OF A TRUST DEED
The Trust Deed is for a set period of time (usually 36 months). At the end of this period any monies still outstanding are legally written off. One affordable single monthly payment will replace all your unsecured debt payments. On approval of the arrangement all interest on your debts is frozen. It may be possible to make more favourable arrangements than under Sequestration (Bankruptcy) to retain assets such as the family home. There are fewer restrictions that apply in Sequestration e.g to carrying on in business or holding certain public offices. A Trust Deed is a private agreement between you and your creditors and carries fewer stigmas than formal sequestration. Creditors will be bound by the arrangement even if they did not vote in favour. The Trust Deed will be become protected unless 1/3 in value, or a majority in number of creditors, vote against it. A Trust Deed is a private agreement between you and your creditors and carries fewer stigmas than formal sequestration.
DISADVANTAGES OF A TRUST DEED
The arrangement is a legally binging agreement on you as well as your creditors. If you were to default on the arrangement then the Insolvency Practitioner who will act as your Trustee can petition for your sequestration (Bankruptcy).
WHO MIGHT CONSIDER A TRUST DEED
As a realistic alternative to entering into an informal debt management plan with your creditors. Remember a trust deed lasts for 36 months and any remaining debt is legally written off. To regain control of your finances over a realistic period of time. To avoid Sequestration where that it is considered too drastic a step and where a realistic proposal for payment can be made.
For specialist, confidential advice contact the UK Debt Helpline on 0808 100 3190 or 08000 644 666
