Scotland’s debt scenario is in red with high percentage of defaulters. The average amount of debt is 10 times more than that of the income being earned i.e. for every £ being earned , the debt is round about 10 £. Another study shows that the average amount of budget surplus has gone down by nearly 37 %, and this translates to less disposable income with the people to meet other essential requirements or emergencies. When compared to the previous year, the personal debt arrears have increased by 3 %. Although there is a decrease in the credit card debt over the last 5 years, the percentage is still high at 53%.
This situation has resulted in an increase the number cases of Bankruptcy in Scotland.
Many debt experts advise on utilising the various options provided by the government as well as various organizations to be able to pay back the debts in a more convenient manner. Scottish Trust Deed Advice experts suggest protected trust deeds as one of the better options for paying back the debts, especially in those cases where the amount of debt which needs to be made is much more than the current means and assets.
What is a Trust Deed?
A Trust Deed is one of the debt solutions available
in Scotland. The Trust Deed in Scotland is a protected option which acts as a legally binding arrangement where
in you can pay the outstanding debt as reduced payments over a period of 4
years. At the end of the 4 year payment period, if there is any more amount
which is pending then it is generally written off.
However it needs to be understood that a Trust Deed is like filing for an Insolvency. This would mean that, you can opt for having a Trust Deed only if the total value of the debts is more than the total value of the assets you own. This is one of the effective debt solutions which helped in improving the bankruptcy in Scotland situation. House, vehicles, movable and immovable property etc are considered as assets. The unsecured debts against which you can take up a Trust Deed in Scotland includes personal loans, store cards, Credit cards etc.
Why opting for Trust Deed is good?
Many of the financial and debt solving experts in Scotland consider Trust Deeds to be the better option especially in the cases of insolvency. There are multiple benefits which a Trust Deed in Scotland would offer, which make it a nice choice.
Few of the major benefits of Trust Deed includes :
- The total current debt that you have can be re arranged over a period of four years based on your ability to repay. An Insolvency Practitioner is required, who would be able to ascertain your debt and paying ability to schedule the payments over the four years.
- Any of the debt that remains after the four year period is written off.
- The agreement is a legally binding agreement and is a valued document in the eyes of law.
- After the approval of the trust deed, you would have protection from the creditors. They would not be troubling you for the repayment or would not be able to make any changes to the interest. Further, the creditor would not be able to take any legal action against you and would need to reply on the scheduled payments you have agreed to make over the four years.
- Another benefit of Trust Deed is that there is no need for you to appear for any legal proceedings in the court.
- You are allowed to keep a vehicle whose worth is less than £3,000, even though you are required to sell some of the assets you have.
It is not always a beneficial situation in taking up a Trust deed. Experts suggest to be aware of potential risks so that they can gain the full advantages out of the Trust Deeds. Few of the risks that one needs to be careful includes :
- The Insolvency practitioner who helps you with opting for the Trust deed and planning the payment over the 4 years, tends to take the fees from the amount you repay monthly. Hence it is advised to understand the percentage that is being charged by the Insolvency practitioner.
- A failure in the trust deed would make you land up in a situation of Bankruptcy.
- Few of the organizations to do not prefer employing people who have a trust deed. Hence it is necessary to check with your employers before proceeding to apply for a trust deed lest they end up being unemployed.
- Taking up the trust deed would impact the credit rating for a period of 6 years. ( From the date of which the agreement is being made )