These trust deeds work by helping people with loan difficulties and trouble making credit card payments. Their debt to income ratio has been at a level where they are truly unable to repay the amount they owe within a reasonable amount of time. Anyone meeting these standards might qualify to get a Trust Deed Scotland and get the help they need for getting out of debt.
Homeowners or tenants who live in Scotland will have already met the first part of the necessary criteria. They will also need to have a specific degree of usable surplus income, so that they can manage the payments called for by the trust terms.
People with bad credit history can possible still apply for trust deed help, because with this type of debt solution there is no new borrowing taking place. NO credit search is required.
A Scottish trust deed is a document that is legally binding and administered by what is called an ‘IP’ or insolvency practitioner. This person will become the Trustee. They will assess the financial circumstances to ascertain what amount you can reasonably afford to put forth toward the unsecured debt.
This new Trustee will be responsible for the negotiating and the agreeing to of the trust deed terms. It usually takes the form of one single monthly payment that has been lowered to reach a level of affordability for the applicant. It is usually spread out over and based on a term of 36 months. The applicant makes payments to the Trustee, who in turns divides it, and pays the appropriate amounts to the appropriate creditors on the applicant’s behalf.
When this 36 month period ends, any outstanding debt gets written off and the applicant becomes debt-free.
The protected part of this process is extremely important. It is only when a trust is protected that a legally binding agreement is put into place that creditors have to abide by. Having the protected status applied to the Trust Deed means that creditors will not be able to take any legal action against the applicant. For a Trust to become protected, this has to be agreed to by a majority of creditors involved, and who represent more than 1/3 of the total amount of the debt.
Once an applicant is certain they want to proceed with the process, and everything necessary has been done, the paperwork must be signed by the Trustee (IP). A Scottish trust is very similar to an English IVA (individual voluntary agreement) but there are a few differences in them. Their main objective, however, is the same. Debt repayment is agreed upon by both debtor and creditor. Avoiding bankruptcy and solving the debt problem is the core purpose of a Scottish Trust Deed.
Creditors involved with this process are given 5 weeks to make any objections they have regarding how much money they will accept for repaying the debt, if they do not accept or reject this offer, or if less than half of the total creditors object, then the debtor may begin making their proposed payments. After making the monthly payments in a timely manner, once the 3 year period is over, the applicant is considered to be debt-free, even if only a fraction of the payments have been made.
There are, however, some assets that must be sacrificed along the way. If an applicant owns a vehicle that they do not necessarily need for getting to work, they must sell it to add to the Trust Fund value. The Trust will be funded first by however much of the applicant’s earnings have been calculated by their Trustee. However, any assets they do not need. Like a car, expensive collections, a bike, or anything else of value, must be sold off and then added to the fund.