Any experienced and professional Insolvency Practitioner would advise you that declaring bankruptcy or sequestration should always the very last resort to getting out of your financial entanglements. If you are a resident of Scotland, one of the most feasible solutions to your financial issues is a trust deed, a legally binding arrangement you enter to make reduced payments over a period of 4 years and at the end have all your debts written off so you can start rebuilding your finances a fresh.
A trust deed is available in Scotland only. If you are a resident of England, Northern Ireland or Wales, you may apply for the slightly different IVA (Individual Voluntary Arrangement). Because the Trust Deed is a form of insolvency, you can only be approved for it if your unsecured debts outweigh the total values of your assets including inheritance, bonuses and lottery winnings. Note that the agreement specifically mentions unsecured debts because secured debts do not count. In order to fully understand what a Scottish Trust Deed is, you should understand how it works.
How the Trust Deed works
When you decide that a Trust Deed is your best way out of the financial hardship you are in, you will need the help of an Insolvency Practitioner (IP) to work out the details of how much you can afford to make as repayments to your creditors over a period of 48 months (4 years). You cannot set out to get a Trust Fund without an IP and succeed because you need a trustee to act on your behalf and draw up a proposal to present to your creditors.
Consulting an IP is a great idea because you get your finances analysed by a professional who will chart the best way forward, and draw up an agreement that will favour both you and your creditors. Besides, the IP will also support you for the entire duration of the agreement and can help you get a ‘Protected Trust Deed’ meaning that the agreement will protect you from being constantly harassed to make payments.
How to qualify for a Scottish Trust Deed
The requirements to qualify for a Scottish Trust Deed are pretty simple and straightforward. The most important thing is for you to understand what it is and be sure that it is the best possible debt management solution depending on your financial circumstances. If you believe you have the capacity to pay back your debts and what you need is time, you should know these other basic qualification criteria required when seeking a Trust Deed:
- You must be living in Scotland or must have lived in Scotland for at least the past 6 months.
- You owe money to at least 2 creditors.
- Your total unsecured debts total at least £5,000.
- You are in a position to make a payment of at least £80 every month.
How to apply for a Scottish Trust Deed
The most difficult part of getting a Trust Deed is drawing up and agreement and convincing creditors to stop the pressure or any legal actions against you. When you hire an Insolvency Practitioner as your debt advisor, it will be much easier to assess your situation to find the best angle to approach the process.
30 Jul 2014