A trust deed is a kind of arrangement drafted for people with multiple debts. It allows them to pay these debts to a single trustee and settle it for a period of three years, after which, even if there are remaining debts, it would be written off and the debtor is debt-free. There are many different rules governing Scottish trust deeds, as well as some drawbacks and positive aspects. Before deciding to enter into this repayment scheme, it pays to learn about it well to know some of its drawbacks and prepare for it. Trust deeds could be helpful especially if one suffers from multiple debts and is being bothered by many creditors.

Not everyone can be granted Scottish trust deeds and not every loan could be covered by it as well. Your Insolvency Practitioner will be the one to assess your financial situation and how you could comfortably pay for your debts. As a debtor who chooses to enter a trust deed, he has the responsibility to religiously pay for the fees, because he could be subjected into legal action by the creditor and the trustee as well.

The debtor will wait for a period of six weeks before the drafting of the Scottish trust deed to take place. Once approved and accepted by the creditor, the interest and charges will be frozen. No legal action will be taken to the debtor and the trustee will be the one to contact and deal with creditors. It is simple to setup trust deeds because there is no fee and court appearance required. Fees may be running from the contributions to be made once drafted. But what debtors must understand is that trust deeds cover only unsecured debts. Mortgages and student loans are not covered. But once a trust deed is protected, the creditor must accept the balance of the trust fund as settlement. The amount to be paid could also be flexible once there are changes in the debtor’s financial situation.

A trust deed is not purely good news so that the debtor could easily get away from his obligations. By entering one his credit rating will be negatively affected. This may mean he will have difficulty applying for loans in the future, or would not be able to have loans while the deed is ongoing. He could also have difficulty applying for a job because some companies do not accept applicants with Scottish trust loans and he could be recorded at Edinburgh Gazette or public records.

A person who is full of debts has the obligation to settle all these since he was the one who benefitted from it in the first place. It is difficult to avoid debts especially during rough times, which is why arrangements such as Scottish trust deeds are designed. This is somewhat a legally binding settlement to make repayment easier, but it somehow protects lenders as well because not all loans can be covered. A trust deed should not be abused and must be a way for debtors to settle his obligations realistically.

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