A Scottish deed can help you get out of crippling debt that you may be unable to clear. However, only people who live in Scotland and have unsecured individual debts of at least £5,000 or joint debts of at least £10,000 can set up and use Scottish deeds. Here is some more information about Scottish trusts.
Setting Up a Trust Deed
Since Scottish trusts are legally binding arrangements, you will require the services of a licensed insolvency practitioner (IP) to set up one. Your trustee will also handle all trust deed application issues He will review your finances and work out how much you can afford to pay creditors. He/she will consolidate all outstanding debts into a single monthly payment regardless of the number of creditors. Your creditor will send the proposal that he/she has prepared to your creditors. They have five weeks to raise objections. If creditors who hold more than a third of your debt object to the submitted proposal, your IP/trustee will have to go back to the drawing board and come up with a new proposal. On the other hand, if less than a third of your creditors raise objections, the Scottish deed proposal will become valid and legally binding to you and your creditors.
Trust Deeds and Assets
Before setting up a deed, you should have a good grasp of its effect on your assets. It is wise to seek Scottish trust help from a professional. In general, Scottish deeds affect asset classes in different ways. To start with, an unprotected deed does not affect the status of any property that you may own such as a house. You do not have to include your home as part of a Scottish deed arrangement. The problem with an unprotected trust deed is your creditors could seek to use equity tied to your property to clear their debts. They could even go to court to petition for your sequestration.
On the other hand, you will have to transfer your property to your trustee and it will become part of your deed. The good news is a protected deed gives you plenty of breathing space to pay off creditors. For example, they cannot get in touch with you directly to demand their money; they will have to go through your trustee.
If you own a property jointly with another person/people, your trustee or creditors cannot demand for its inclusion in a deed. In such a situation, your IP and creditors must seek the consent of the other party. The same is true if you live with your parents or live in a rented house.
Besides property, you can lease a car while still in a deed. Nevertheless, you cannot become the owner of such a vehicle at the end of the lease period. At the same time, you should keep up with trust deed payments. The fact that you are leasing a car does mean that you can default on payments. If you do so, your trustee can go to court and start sequestration proceedings against you.
It is possible to own a car while in a deed provided you buy it on hire purchase terms. At the end of your deed period, your trustee will have your car valued. You must deposit money equivalent to the current value of your car into your deed. If you change cars before your deed expires, you must deposit money equivalent to the value of your current car into your Scottish deed.
Trust deeds and LILA (low income, low asset)
Some people may be unable to clear their debts because they have very low income or assets with low market value. This makes them unsuitable for setting up Scottish deeds. Such people could go to court and start sequestration proceedings on their own. You could fall under this category if you do not have a single asset worth more than £1,000. Furthermore, your total asset base should be worth less than £10,000. Take note that an indebted person who owns property jointly with other people does not qualify for LILA status.
All in all, if you are struggling to pay your creditors, you should consider consulting debt help Scotland experts. They will give you relevant advice and help you set up a trust deed. Such a deed will allow you to pay off creditors within four years. After the end of this period, you will be debt free.