The 'January Blues' are very much upon many of us. With Christmas already feeling like a distant memory, the next payday seeming far in the future, and miserable weather doing little to lift our spirits, the beginning of the new year can often be a tough time.
Unfortunately, for Scottish residents, there doesn't appear to be too much happy news on the horizon when it comes to financial matters. Accountancy firm PKF International has forecast further gloom for residents of Scotland in 2012, as The Express reports.
The firm estimates that more than 20,000 people in Scotland entered bankruptcy or a Protected Trust Deed in 2011 - and that 400 Scottish residents will become insolvent every week over the course of the coming year. (A Trust Deed is a form of insolvency available to Scottish residents only: more Trust Deed information can be found here .)
That prediction may sound like grim news for many people who are already struggling to cope financially in the current climate - but for some Scots dealing with unsecured debt problems, a Trust Deed could still be the best way to make their debts manageable once again.
Keep reading to find out what a Trust Deed is, and how it could help you if you're having difficulties with a significant amount of unsecured debt.
What is a Trust Deed?
A Trust Deed is a legally binding agreement available to Scottish residents only. Once agreed with your unsecured lenders, a Protected Trust Deed could lower your monthly repayments to an affordable level, prevent your lenders taking any further action against you and write off any remaining debt included in the agreement after (in most cases) three years.
Trust Deeds - the benefits
If you have a significant amount of unsecured debt, and you can no longer afford your monthly payments, a Scottish Trust Deed could be a suitable approach.
Once a Trust Deed is agreed by your lenders and becomes protected, you could:
• Have a single affordable payment to make per month - calculated to fit around your essential monthly costs (rent/mortgage, food, transport costs, etc.)
• Be free from your unsecured debts after three years (in most cases)
• Avoid any further action from your unsecured lenders
• Avoid the consequences of bankruptcy.
On the downside, your credit rating will be affected for six years - which is likely to make further borrowing during this period difficult - and if you're a homeowner it's likely you'll have to release some of the equity in your home as part of the agreement.
However, a Scottish Trust Deed could offer borrowers with unaffordable unsecured debts a realistic way out of their debt problems. If you think a Trust Deed could be the best option for you, a debt professional could give you more advice.
How could I set up a Trust Deed?
As it's a type of insolvency solution, a Trust Deed can only be set up with the help of a qualified Insolvency Practitioner (IP). If a Trust Deed is the most suitable approach, an IP can help you draw up a Trust Deed proposal, designed to show your unsecured lenders how your Trust Deed could work out and why it's the best option for you. They'd also oversee the whole process, providing an expert point of contact if any questions or issues arise.
The details of your Trust Deed proposal will be advertised in the Edinburgh Gazette for lenders to see, and then, unless more than half of your lenders - or those who represent more than a third of your debt - object, your Trust Deed will become protected.
Then, as long as you keep up with your monthly payments and stick to the terms of your agreement, you'll be free of your unsecured debts after - in most instances - 36 months.
