January
30 - 2013

An Alternative to Bankruptcy

If you are in serious financial difficulty you may be worried about facing Sequestration, this is the Scottish equivalent to bankruptcy. This is understandable in cases of serious debt if you don’t feel you are able to repay this in full; however Sequestration may not always be your last resort.

A Trust Deed from Your Debt Expert may just be the alternative to sequestration you need in times of serious debt problems. A Trust Deed, like Sequestration, is a form of financial insolvency and can write off a large portion of your debt.

Trust Deeds facts

 

  • A Trust Deed is a voluntary agreement you can enter into with your creditors in which you will agree to repay a certain amount of your debt while the rest is written off.
  • The amount you will repay each month while in a Trust Deed will calculated based on the amount that you personally can afford as your personal circumstances will be taken into consideration by an insolvency practitioner (Trustee).
  • The Trustee will act on your behalf throughout your application for a Trust Deed and so you will not have to communicate directly with any of your creditors. Any administration required when applying for a Trust Deed will be dealt with by the Trustee.
  • Once a Trust Deed is approved it becomes legally binding and so your creditors cannot take any legal action on your outstanding debts. However a Trust Deed Proposal can be rejected by any of your creditors.
  • Unlike Sequestration, if you are a homeowner you will not be required to sell your home when entering a Trust Deed. Although you may not have to sell your house you may have to release any equity you have on the property.
  • Any costs for administering the Trust Deed are negotiated between the insolvency practitioner and the creditors and will be deducted from the agreed monthly payments.
  • A Trust Deed will normally last 3-5 years and at the end of which all remaining debts which were included in the Trust Deed will be written off.
  • People in certain lines of work can be prohibited from entering a Trust Deed by their employer. A Trust Deed can also have a serious negative affect on your credit rating.

 

A Trust Deed can offer an alternative to Sequestration to those of us in sever financial difficulty and can save you from having to sell all of you assets. However it is important to remember that when entering a Trust Deed you are entering a legally binding contract and it should not be entered into lightly.

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