Facts about Scottish trust deeds

If you are deep in debt, there are a few viable options to help you in redeeming yourself. This may be in the form of a trust deed or an Individual Voluntary Arrangement. First, you need to consult with a financial or debt expert in order to get the viable debt help to clear your debts. A Scottish trust deed is an arrangement between unsecured creditors and the debtor. It involves a detailed plan on how the debtor will pay off a proportion or all the debts owed to the creditors. It is a recognised formal repayment plan. Individual voluntary arrangement and a Scottish deed can both be used by an insolvent individual to redeem themselves financially.

The Merits of using a deed
You are given a period usually not exceeding five years to pay a portion of the debts you owe to the creditors. This gives you the chance to make appropriate financial arrangements to service your loans properly. During this time, your creditors do not have any right to sue you or take over your assets as repayment. You will therefore not lose your assets unless you are willing to sell them in order to offset the outstanding balance. Most people are afraid of losing their homes and you can be guaranteed that if it is not included in the arrangement then you home is secure.

Since the deeds are no longer advertised, you will not experience any form of stigma. The deed is an agreement between you and your creditors and no one else outside this scope will find out about your status unless you want to disclose the information to them. The arrangement is in such a way that you are comfortable making the payments. It is therefore based on your abilities to pay. The deal is administered by an insolvency practitioner who can also offer you free advice on how to get back on a successful financial track.

When the period in question elapses, you are a debt free person since all the outstanding balance is written off. Since you do not deal with the creditors directly, you will have Peace of mind.  There will be no calls pressuring you to pay up your debts quickly and the creditors will not camp on your premises for this purpose either. At the end of the period, you have regained control of your finances and know better than to accumulate huge debts anymore.

Demerits
The agreement allows the insolvency practitioner to scrutinise every transaction that comes your way. This may be in the form of revenue or expenditure items. Therefore, your life and that of your family will be under close scrutiny on a daily basis. This has an effect on your family and especially your partner. Your bank accounts will also be closely monitored mainly to ensure you do not accumulate additional debt as you continue servicing your current debts. You are allowed to take loans as long as they do not exceed £500.

This arrangement has an effect on your credit rating. This means that after the agreed upon period, you credit rating will be very poor. However, this improves with time as long as you act in a way that will redeem your credit worthiness. Some organisations do not allow their employees or members to participate in such an agreement. Therefore, you will either choose another method or you will lose your membership/ job. The proposal you present to your creditors may be rejected. This means that you have to come up with a better proposal or another way of paying up your debts.

If you hold a position as a director in any firm or you are a partner in a firm, your insolvency terminates the position or the partnership. If this is your only source of income, you need to rethink your options before you settle down on deeds or IVAs. If it is not registered, the deed may not protect you from those creditors who did not agree to your proposal. You may therefore face demands for prompt payment of their debts or face legal action.

Secured debts
All your secured debts are not affected by the agreement you enter into with your unsecured creditors. This includes your mortgage. You may still continue servicing your current mortgage but if you are having any trouble keeping up with the payments, you may renegotiate with the mortgagor for a more suitable deal.