Why Consider The Pros And Cons Of A Scottish Trust Deed

Being in debt is not an unusual occurrence

Being in debt is not an unusual occurrence. However the constant reminders from your creditors can be suffocating. This is why people search for different ways of managing debt in order to avoid negative eventualities such as bankruptcy or sequestration as it is called in Scotland. One way to manage your debt and feel as part of the society again is through a Scottish trust deed. Before you can choose the deeds as your best way out of your pressing problem, it is important to learn about the pros and cons of a Scottish trust deed.

With the protected trust deeds which are almost similar to IVAs, one can transfer his assets to trustees who help in dealing with the creditors. This way one can get out of debt much more easily. Usually a specified period is set aside for the repayment of the debt in affordable installments. Any extra amounts that remain after the repayment period is over are usually written off.

In order for a person to enjoy the benefits of Scottish trust deeds, it is very important to take into account certain considerations. First of all one should be ready and willing to co-operate with the trustee. Secondly, one should ensure that he meets the monthly contribution agreed. The person should also avoid taking any further credit and inform the trustee in case he receives substantial income amounts normally exceeding two hundred pounds.

One common advantage of trust deeds is that they effectively stop any interest charges on your existing debts. Remember, the reason for non repayment is usually the interests which pile up every month. The worries of handling your creditors are also fully eliminated.

Compared to sequestration, trust deeds present a more flexible option. For instance the debtor may still hold some public offices and retain some director duties. In addition the information about the trust deeds will not be published while companies can still continue trading.

The arrangement is usually done on a more informal platform which allows for negotiation between the involved parties. This means that the debtor will not be bound in a rigid contract while the creditors are able to specify terms which are favorable to them.

Regardless of all these benefits, one should approach Scottish trust deeds carefully. This means that one should consider the disadvantages presented by signing one of these documents. Some of the disadvantages presented include damaging the debtors credit ratings. The contracts also require full commitment for at least three years since they are legally binding. Another disadvantage is the requirement for full disclosure of funds received including home equity.

It is also important to note that signing the trust deeds does not prevent sequestration permanently. This happens since one is prevented from such eventualities only if he or she is able to make all the agreed monthly payments. The last disadvantage of this option is that the debtor is charged an administration fee by the trustees which mean incurring additional cost. It is therefore clear that the pros and cons of a Scottish trust deed have to be considered fully before choosing this option.

by: Brian Bowie.

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