Trust Deeds – Know More About Them
In simple words, a trust deed is nothing but a formal and legally binding agreement between a debtor and a creditor. The Trustee puts together a trust deed form of proposal to the creditors for approval and administers the Trust Deed.
The Trust Deed may be registered as a Protected Trust Deed. Doing so will help prevent lenders from taking legal action against you and ensure that interest will be frozen on your debt. This deed is granted only when two thirds or more of your creditors by value agree to it. There are various advantages of a trust deed:
- Your trustee will handle all your creditors on your behalf and ease your tension of dealing with them
- It also allows for flexibility and costs less to administer
- Any legal action against you will be immediately stopped
- Trust deeds are for duration of 3 years, beyond which your pending debts are written off
- It will also save you from public embarrassment unlike sequestration (bankruptcy)
Trust deeds in Scotland are very popular with borrowers in Scotland. Basically, a trust deed is a legally binding voluntary arrangement, available only in Scotland, which offers debtors an alternative to bankruptcy (sequestration).
Borrowers who cannot repay their debts can find an alternative with these deeds. They can make use of a monthly repayment schedule based on what the debtor can afford to pay. These deeds are only applicable where a debtor does not have enough disposable income. This means a debtor not having surplus money after day-to-day living expenses to meet his/her unsecured contracted credit repayments. There are some disadvantages of trust deeds too.
|
