Tuesday 13 December 2011

What is a Scottish Protected Trust Deed

What is a Scottish Protected Trust Deed

A protected trust deed is a debt solution available to people living in Scotland which allows people to avoid the more serious solution of bankruptcy or as it is called in Scotland sequestration.

There are clear similarities between a trust deed and an individual Voluntary Arrangement (IVA). Within these solutions you pay as much as you can back to your creditors over a set period of time, at the end of this period any outstanding sums due to your creditors are written off. The typical term of each solution is 3 years for a protected trust deed and 5 years for an IVA.

In order for a trust deed to become protected either a third in value or a majority in number must agree to the terms of proposal .The actual proposal is put to your creditors on your behalf by an appointed insolvency practitioner , also called an IP or trustee. Your Trustee must place a notice in the Edinburgh Gazette in order that no creditor can come back at a future date objecting to the petition. All creditors must be informed of your intentions and sent a copy of the Edinburgh Gazette.

Your creditors thereafter have 5 weeks to object to your petition before it becomes protected as long as fewer than those with a third of the value of debt object or fewer than a third in number raise objections.

A protected trust deed is designed to help people avoid bankruptcy however it is a serious debt solution and should only be used as a means of avoiding bankruptcy. Your credit rating will be affected and obtaining credit will be extremely difficult for a period of 6 years in addition to this you are not permitted to take out credit through the duration of your protected trust deed.

There are however many benefits over the most acute of solutions (bankruptcy) namely you will be able to work in a self employed capacity or remain so if you currently are self employed. You will also be able to retain or become a company director through this solution as well as holding public office should you choose. And finally any outstanding amounts due to your creditors after you have completed the solution will be written off.

As with any debt solution you should always seek independent and impartial advice in order to allow you to make an informed decision that is best for you. There are several not for profit charities who can offer excellent advice on all debt solutions available who will not charge you for the advice you receive.

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