Write Off Unaffordable Unsecured Debts
With A Scottish Trust Deed...
What is Sequestration?
Sequestration is the Scottish legal term for Bankruptcy. It is an option if you are unable to pay your debts as they fall due and can allow for up to all of your debts to be written off entirely. A licensed Insolvency Practitioner would take control of your assets and assess whether you would need to pay an income contribution for a period of up to 36 months.
Is Sequestration The Only Answer To Bad Debt?
In a nutshell No. A common problem is that when creditors apply pressure to a customer and make demands that seem unreachable, the stress can cause a people to make rash or panicked decisions. Regularly receiving warning letters and stressful phone calls can grind a person down. This can lead to a person believing that sequestration will quickly end the stress.
Although it may seem like a good idea at the time, the fact is that sequestration is the same as bankruptcy in Wales and England. The damage done to an individual’s credit rating will prevent further credit options from being available for years to come. This may be the last thought in the mind of someone struggling with debt problems, but the long term fix is the best fix. The unexpected costs that regularly arise can sometimes be acquired on a payment plan basis, and this is sometimes the only option for many families.
The fact is that a Protected Trust Deed offers far more benefits than an application for sequestration. These amicably produced agreements create a binding contract between the customer and the creditors. In many cases the contract means that the creditors are no longer allowed to apply pressure to the customer. A person’s disposable income is calculated and paying off the debt will still leave them able to buy essentials.
What Is The Process For A Protected Trust Deed?
The process is very straight forward. The current financial situation of the client will be analysed by an insolvency expert, who will look at both incoming and outgoing expenditure. From there a realistic payment plan can be determined to pay off the creditors. All living costs will be accounted for, including food, rent, and petrol, and an emergency fund will be created to cover unexpected costs. Once a manageable amount for repayment has been agreed upon, an offer is put forward to the creditors. If after a 5 week period there have been no objections from the creditors, then it is taken that the creditors are happy with the new terms and the plan is initiated. A trust deed usually lasts for 36 months, but could last longer depending on the situation of the customer.
Who Are They For?
Protected Trust Deeds are designed to assist those struggling with debt problems by helping to ensure the client doesn't lose their home or other assets when dealing with pressure from creditors. There is, however, the possibility that in order to make a payment the client may have to sell their vehicle, or release the equity in their property. The chances of this happening are entirely dependent on the amount owed by the debtor.
Avoiding Sequestration does not have to involve undue stress or loss of property and possessions. Finding out more about Protected Trust Deeds will rationalise the problem. The answer to many debt problems is easier than sequestration. Don't let the debt mount.