(The following is a guest post pertaining to those who live in Scotland…)
Anyone worried about their mounting debts should not delay asking for help. The longer you leave the situation the worse it will get. More problems will develop the longer the problems remain unresolved. Here are some of the more common debt relief options available for Scottish residents.
What is a Protected Trust Deed?
Applying for a Protected Trust Deed allows you to write off unsecured debt which you cannot afford to repay. Applying for a trust deed means you will make a single monthly payment of an agreed amount to the insolvency practitioner who will then pay your creditors. The insolvency practitioner will act as trustee of your new trust deed, and deal with the creditors instead of you. Trust deeds normally run for four years, at the end of the set period all remaining debt covered by the trust deed will be written off.
How to get a protected trust deed
To obtain a trust deed you will need to talk to an insolvency practitioner who will examine your finances and determine if this is a suitable solution for your financial difficulties.
The insolvency practitioner will present your proposed terms to your creditors. If they agree to your terms then your trust deed becomes protected. If they do not agree then your case will be assessed to see whether their objections are reasonable.
If you continue to make the regular monthly payments as set out in your trust deed then you will have no further contact with your creditors.
Bankruptcy or Sequestration
Bankruptcy enables you to have your debts written off. After a year in bankruptcy all your unsecured debts that you can no longer maintain the repayments on will be written off, and you will eventually be free to start building your debt free life. As soon as you enter bankruptcy your creditors will have to stop pursuing you for what you owe them.
Applying for bankruptcy is a serious step and should not be taken without first seeking advice to see if other solutions may be more suitable.
Advantages of bankruptcy:
You will not need to make any payments that you cannot afford. You will obtain legal protection from your creditors. Your debts will be written off and you can start the process of rebuilding your life.
Disadvantages of bankruptcy:
You may still be required to make payments towards your debts for three years. There is also the possibility that bankruptcy could cost you your home, as your assets will be sold to make payments towards your debts. There will be an effect on your credit rating in the long-term.
If you are on a low income, do not own property and have very few assets then LILA (Low income, low asset) bankruptcy may be the right path for you. If your creditors have not yet begun legal action to recovery their money and you do not qualify for other forms of help then talk to a professional advisor and find out if LILA could get you the help you need.
With any debt problem it is important to get professional advice on the options open to you before making any decisions.
photo courtesy of la cegna