A Trust Deed can basically be defined as legal agreement which is voluntary for a person or people who have debt problems. The agreement is usually between the creditor and the debtor and is taken in the place of bankruptcy.
Individuals who are having problems repaying their debts should consider this method of debt settlement. It is convenient both for the money borrower as well as the creditor as it prevents the borrower from filing for bankruptcy in Scotland. This is not the ideal debt solution as it will affect numerous aspects of your life, including your credit rating and even your property.
One of the major advantages of such a type of agreement is that it is usually based on the amount an individual will be able to pay over a given period of time. The period is normally three years within which one is expected to have cleared his or her debts. However, depending on the agent, one can get the period prolonged to about four years. This means that the agent must be good at his or her job and the creditor is flexible to allow the debtor more time.
Can Creditors Contact Me?
What most people are unaware of is that once the Protected Trust Deed has been signed the creditors are not allowed to disturb their clients by calling or harassing them in any other way. The agreement is followed by payment of an agreed amount on a monthly basis for a period that has been passed by the Scottish Government. After all the monthly payments have been made within the agreed time frame, the creditor is not entitled to ask for any additional payments from his or her client.
What Happens At The End?
After completion of payments, one has the chance to build his or her credit history once again. This gives one a fresh start if not a second chance to be responsible in terms of borrowing funds. After working on your bad credit history, one will be in a better position to borrow more funds from creditors who will be more than willing to help. This will only happen if the individual has settled all his or her debts in the shortest time possible in order to get a good credit report.
Is My Debt Written Off?
One has the ability to write off debt of up to about 90% of their debt. This enables a person who has limited resources to be in a position to pay off all the debts without having to pay any accumulated interests. Individuals who take up such types of trust deeds have no reason to worry about passing credit checks which are in most cases compulsory. This type of agreement is also good for people who want to manage their funds wisely without incurring costs in form of additional payments.
Can The Terms Be Negotiated?
It is also possible for an individual to negotiate the terms of agreement with the trust company of his or her choice. This means one can reach at an agreement where one will only have to service his or her debts using only disposable income. This in turn means one will be in a position to meet his or her basic needs without undue pressure. Another agreement may be one whereby the debtors or client are permitted to keep their houses or even automobiles in the event of signing the agreement. However, one should be aware that the process may take as long as five to six weeks and may also affect credit ratings of the client.
Use of such deeds as a method to settle debts may have many advantages but it also has its own disadvantages that one may want to consider. One of the disadvantages is that the client will not be in a position to obtain credit for the duration of the deed. In case one defaults in payment, he or she may end up losing a home or any other property such as vehicle and property that is built up in the home. In case one gets a pay rise at work or inherits money, he or she may be forced to increase the monthly contributions.
This does not go well with most people as they usually have other plans with such funds other than settling their debts. It is wise to always seek advice from financial experts so as to be aware of all the risks involved. Being aware of all the financial implications will help one be in better position when signing a trust deed.