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By: John Smith
on 30th Oct,2013
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What Exactly Is A Scottish Protected Trust Deed

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Many people in today’s world are being impacted by the global economic situation, and nowhere more so than in Scotland.


As the credit crunch takes its toll, the pressure on all our personal finances is rising to an all time high. Never before has it been so important to be aware of the different options available, should trouble strike. So, if you live in Scotland and are experiencing financial trouble you need to explore your options and find out for themselves exactly what is a Protected Trust Deed?


A Trust Deed is a formal debt solution, which acts as an alternative to bankruptcy for people living in Scotland.


A Trust Deed forms part of the Bankruptcy Scotland Act 1985, amended 01 April 2008 and allows people suffering severe debt problems the chance to enter a voluntary arrangement with their creditors to repay only that part of their debt that they can afford for a fixed term, which is normally 36 months.


After the fixed term has been completed, the Trust Deed applicant is considered legally debt free, even though they may have only repaid a small part of their original debt, with any outstanding debt being legally written off by the Trust Deed.


The Trust Deed can only be proposed and administered by a licensed Insolvency Practitioner. The Insolvency Practitioner acts as the Trustee of the Trust Deed and it is his role to ensure the full terms of the Trust Deed are adhered, to by both parties.


As part of the application process, creditors are given an opportunity to decline the proposed Trust Deed should they feel the proposal does not reflect their best interests, however, there needs to be a minimum 33% rejection, in debt terms, by creditors before the Trust Deed application is considered rejected.


Less than this level of rejection, the Trust Deed is considered acceptable to all creditors and reaches ‘Protected’ status.


By reaching ‘Protected’ status, the Trust Deed becomes legally binding on all the creditors, whether they voted in favour or not. What’s more, the Trust Deed then forth provides legal protection from any creditor trying to enforce recovery action against the applicant through the courts.


The Scottish Trust Deed does have some serious implications though. It has a significant impact on the applicant’s credit rating, making it difficult to gain any type of credit for 6 years.


It also has a significant impact on applicants who have ownership in a property. The Trustee will expect ownership of the property to be passed to him as part of the Agreement. He will then have the discretion to determine what should be done with the asset for the best interests of the creditors.


With this in mind, it is always advisable to speak to a Trust Deed specialist before embarking on the application process, so as to minimise any nasty or unwelcome surprises.

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Last edited: 30th Oct,2013 by John Smith
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