What happens when you can’t pay off your debt

This short article contains a review of Scottish law as far as a protected trust deed in scotland and your assets are concerned. What happens when you can’t pay off your debt Under Scottish law protected trust deeds are voluntary arrangements, which help people to deal with significant debt problems. They offer an alternative to bankruptcy, and those who are eligible to follow this path can become free of their debts within three years. There are other benefits as well. The trustee will deal with all correspondence; there will be no court hearings and no publicity in the newspapers.


Those who have significant debt problems, and pursued the repayment of those debts, may find that a protected trust deed is a good alternative to bankruptcy. The debtor’s possessions (in Scottish law these are referred to as his estate) transferred to a trustee. Once the trust deed registered as a protected trust deed, creditors are unable to petition for the debtor’s bankruptcy.


The debt is frozen when the trust deed achieves protected status, and for the next 36 months, the borrower is obliged to pay as much of his income as he can reasonably afford to the trustee. The administrator is responsible for distributing this money to the creditors, and also for dealing with the debtor’s assets. After the 36 month period has expired the borrower will receive a letter of discharge, and any remaining debts will be written off.


Noticed that many of those people who could have resolved their debt problems through a protected trust deed did not feel able to follow that path because they were worried that they might lose their family home. The law stated that any equity in the family home had to release for the benefit of the creditors. Although there were many cases where that could be done through a remortgage, or through a third-party buyout, there were still some cases where the debtor forced into a sale.


The law was changed in 2010 so that a person’s principal residence could be excluded from their protected trust deed as long as secured creditors agree not to claim for any debt under the trust deed. Expected to prevent cases where people are forced to leave their home for only a small gain for their creditors.


This change to the law will increase people’s confidence that they may enter a protected trust deed without putting their family home at risk. In the past, there were significant impacts on debtors, on their families, and in society as a whole, due to cases where borrowers were forced to sell their home.


That is to enable the debtor to avoid bankruptcy, and the creditors to receive a better repayment than would have been possible were the debtor to be declared bankrupt.


Debtors and their relatives suffered from health problems, and their children had difficulties at school. The costs to society could be significant, including the provision of emergency housing.


Protected trust deeds under Scottish law provide an alternative to bankruptcy for those who have problems with debt. The recent change to the law will make the protected trust deed a more accessible option for those who own property.

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