A Scottish Protected Trust Deed Can Help You Avoid Bankruptcy
A Scottish protected trust deed is a means in Scots law for you to pay your creditors what you owe them through a trustee. It is basically a means of avoiding bankruptcy by placing all your assets into the hands of a trustee who will realize them when necessaery and pay your creditors according to the value of the assets.
In a regular Trust deed, you agree to tranbsfer your assets to a trustee, who then communicates with your creditors and arranges your payments. The repayments are made initially from any cash you agree to pay into the trust while it is running, and the shortfall will be taken from your assets such as your home or its contents, although any essential items of furniture such as your bed,cannot be sold. It is fundamentally a way to avoid bankruptcy (or sequestration). However, those creditors that reject the trust deed are still able to take further action against you to recover the debt. A Protected Trust Deed is different in that even if creditors object to it, they can take no further action if over two thirds agree. They are obligated to adhere to the terms of the protected trust deed.
The following steps must be followed for the trust deed to be 'protected':
1. Your trustee must place a notice in the Edinburgh Gazette, 2. Let each of your creditors know in writing that you have petitioned for a Protected Trust Deed, and 3. Each creditor must be sent a copy of the notice placed in the Edinburgh Gazette.
If any of your creditors wish to object they have five weeks in which to do it, starting from the date of your notice being published in the Edinburgh Gazette. The trust deed is then protected if:
a) Fewer than one third of your creditors object, OR b) Fewer than those representing a third of your total debts object.
If either of these groups do object, then you may be able to petition for sequestration yourself, but only if you owe more than £3,000 and you have never been declared bankrupt over the past 5 years.
A protected trust deed should only be used where you have no other means of repaying your debts and do not wish to be declared bankrupt. Your insolvency will come to the attention of Credit Reference agencies because because of the notice in the Edinburgh Gazette, and all of your assets (all that you own) will be inventoried by the trusteee. You should also pay the trustee as much of your income as you can afford after paying your essential household bills.
Obviously, the more you can afford to pay yourself, the less likely it will be that your house will be sold. You could also think of arranging a loan secured on your home and pay your debts that way. If necessary, the trustee can sell your house to raise enough money to pay your debts under the terms of the trust deed, and if your property is co-owned, then the trustee can go to court to force a sale and the trust, not you, will receive your share of the proceeds.
It is thefore the last chance saloon, and should be regarded as your last chance to avoid bankruptcy. Your creditors are obligated not to contact you any more, but with the trustee, even if they had objected. After running for three years, the trust is deemed to have paid your creditors in full, and any remaining debt is written off - any property and other funds still lying in trust are returned to you.
Thease are the main reasons why you should consider a protected trust deed apart from the fact that it will enable you to avoid bankruptcy:
• You no longer have the pressure of continual telephone calls from creditors
• All interest charges and costs are stopped when the protected trust is set up
• It cost less to set up than bankruptcy
• You will normally be able to serve as a company director
• You will normally be able to remain self-employed
• You will normally still be able to hold public office
• All remaining debt after three years will be written off
• Information about the protected trust deed is not published in the press like bankruptcy is
However, you must take no further credit during the period of the trust deed, pay the agreed monthly contribution and cooperate fully with the requirements of the trustee. If your financial situation improves in any way, such as from a legacy or even a lottery win then you must inform the trustee.
The Protected Trust Deed is entirely a Scots law arrangement and is fairly easy to form. First of all you have to complete a quetionairre that will determine whether or not you qualify for a trust deed, and if so, you are then provided with the contact details of a legal firm that can set it up for you. The information with which you have provided them will then enable them to take over the process.
In a regular Trust deed, you agree to tranbsfer your assets to a trustee, who then communicates with your creditors and arranges your payments. The repayments are made initially from any cash you agree to pay into the trust while it is running, and the shortfall will be taken from your assets such as your home or its contents, although any essential items of furniture such as your bed,cannot be sold. It is fundamentally a way to avoid bankruptcy (or sequestration). However, those creditors that reject the trust deed are still able to take further action against you to recover the debt. A Protected Trust Deed is different in that even if creditors object to it, they can take no further action if over two thirds agree. They are obligated to adhere to the terms of the protected trust deed.
The following steps must be followed for the trust deed to be 'protected':
1. Your trustee must place a notice in the Edinburgh Gazette, 2. Let each of your creditors know in writing that you have petitioned for a Protected Trust Deed, and 3. Each creditor must be sent a copy of the notice placed in the Edinburgh Gazette.
If any of your creditors wish to object they have five weeks in which to do it, starting from the date of your notice being published in the Edinburgh Gazette. The trust deed is then protected if:
a) Fewer than one third of your creditors object, OR b) Fewer than those representing a third of your total debts object.
If either of these groups do object, then you may be able to petition for sequestration yourself, but only if you owe more than £3,000 and you have never been declared bankrupt over the past 5 years.
A protected trust deed should only be used where you have no other means of repaying your debts and do not wish to be declared bankrupt. Your insolvency will come to the attention of Credit Reference agencies because because of the notice in the Edinburgh Gazette, and all of your assets (all that you own) will be inventoried by the trusteee. You should also pay the trustee as much of your income as you can afford after paying your essential household bills.
Obviously, the more you can afford to pay yourself, the less likely it will be that your house will be sold. You could also think of arranging a loan secured on your home and pay your debts that way. If necessary, the trustee can sell your house to raise enough money to pay your debts under the terms of the trust deed, and if your property is co-owned, then the trustee can go to court to force a sale and the trust, not you, will receive your share of the proceeds.
It is thefore the last chance saloon, and should be regarded as your last chance to avoid bankruptcy. Your creditors are obligated not to contact you any more, but with the trustee, even if they had objected. After running for three years, the trust is deemed to have paid your creditors in full, and any remaining debt is written off - any property and other funds still lying in trust are returned to you.
Thease are the main reasons why you should consider a protected trust deed apart from the fact that it will enable you to avoid bankruptcy:
• You no longer have the pressure of continual telephone calls from creditors
• All interest charges and costs are stopped when the protected trust is set up
• It cost less to set up than bankruptcy
• You will normally be able to serve as a company director
• You will normally be able to remain self-employed
• You will normally still be able to hold public office
• All remaining debt after three years will be written off
• Information about the protected trust deed is not published in the press like bankruptcy is
However, you must take no further credit during the period of the trust deed, pay the agreed monthly contribution and cooperate fully with the requirements of the trustee. If your financial situation improves in any way, such as from a legacy or even a lottery win then you must inform the trustee.
The Protected Trust Deed is entirely a Scots law arrangement and is fairly easy to form. First of all you have to complete a quetionairre that will determine whether or not you qualify for a trust deed, and if so, you are then provided with the contact details of a legal firm that can set it up for you. The information with which you have provided them will then enable them to take over the process.
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