A Trust Deed Scotland is an agreement between a debtor and a creditor where the debtor signs a formal paper called a Protected Trust Deed that transfers their estate in case of failure to pay their debt. An arrangement of this sort is completely voluntary and may be the way for a person to handle their rising debt problems.
This agreement does not erase any actions taken against the estate in question prior to the signing of the arrangement. Some Trust Deeds will negotiate to have a bank arrestment lifted from the estate. In most cases involving an arrangement of this type the person involved gets to keep their home. If there is equity in the home the equity has to be realized before the arrangement can go into effect.
What is the criteria for a Protected Trust Deed?
A person will have to meet certain criteria to have their Trust Deed registered as being protected. Once the Trust Deed is registered as protected it will stop creditors from asking for the sequestration of the debtor. The best selling point of an arrangement like this is everything to do with the debt will be sent straight to the trustee in charge. The trustee will handle any communication required with the creditors. The court does not get involved in any way. If the debtor refuses to do what the trustee suggests or requires of them then the court can become involved in the matter.
Is it similar to bankruptcy?
This type of contract is different from a bankruptcy filing. If you have a bankruptcy filed you may not be self employed and there is credit restriction. With a Protected Trust Deed you can be self employed if you wish and there are no credit restrictions. After you sign a Trust Deed it can remain on your credit reports for a period of no longer than six years.
Will it affect the equity on my property?
Home owners will be required to deal with the equity in their homes. If a person makes this type of arrangement nothing appears written in the local newspapers. Usually the home owner can deal with the issue of equity without having to sell their home. In cases where there are excessive amounts of equity then the home owner may have to sell the property.
Usually the home owner deals with the equity by making monthly payments or taking out another mortgage on the home. All creditors are given five weeks to object to a Trust Deed being made protected. After three years then the trustee who was appointed over the estate will adjudicate on all creditor claims against the estate.
How does it work?
The trustee will proportionately divide the remainder of the funds that have been gathered and split them between the creditors. The home owner will be notified in writing that the debt has been officially discharged. Any amount left in arrears on the debt is written off and the creditors must not attempt to get the home owner to pay interest on the debt or the balance.
When you sign a Trust Deed you are entering voluntarily into a legal and binding contract to take care of the responsibilities you have and the obligations you have to pay your outstanding debt. When you sign this contract you are agreeing that: You as the homeowner will cooperate with the trustee appointed fully, you agree that the amount designated to be paid each month will be paid and in a timely manner. You agree that you will not be making any more credit agreements during this period and agree that in the event that you receive some unexpected money you will tell the trustee about the additional funds.
What happens if I become unemployed?
If you become unemployed during this time period the trustee should be made aware so they can review the amount of your monthly payments. Your monthly instalments could be reduced or you may not have to make an instalment at all during the time you are not working. If the opposite happens and your financial status is improved your monthly payments may be increased to accurately reflect an appropriate amount of contribution on your part.
A debtor can appeal to the sheriff in instances where the trustee refuses to release or discharge the debtor when the Trust Deed reaches maturity because the trustee claims the debtor did not cooperate with them completely. If the debtor can prove that they attempted to the best of their ability to cooperate with the trustee during the time of the Trust Deed then the sheriff can over-rule the trustee and discharge the debtor.