When debtors become insolvent, paying off their loans can be quite the hassle. This is why most of them go for the option of a protected trust deed. In this article, we will find out more about how a protected trust deed works, its pros and cons.
Table of Contents
If you meet all the requirements, a Protected Trust Deed is a good option for you to repay your debts without losing everything. You will simply sign all necessary documents, and your Trustee will work to protect the Trust Deed.
By gaining protected status, your creditors will be unable to pursue legal action against you to recover their debts. To gain this special protection, the Trustee must not obtain objections from a majority of lenders. Normally, creditors owed above two-thirds of the total loan should agree to the protected trust deed.
The Trustee’s major responsibility after you’ve been protected is to ensure all your debts are paid. They do this by collecting your contributions and liquidating your assets. After this, they make the agreed-upon payments to your creditors.
Remember, your agreed-upon contribution is reviewable at least once a year, or at any time if your situation changes. Your Trustee will make the last payment to your creditors and process your discharge.
This happens after the stipulated payment period which is usually 48 months. Your remaining obligations are lawfully written off once you’ve been released. At this point, your Secured Trust Deed is finished!
Wind Up
If you choose to get a Protected Trust Deed it will be recorded on the Registry of Insolvencies. This is a publicly accessible online database of all Scottish insolvencies. Remember, your trustee has a right to assets obtained for 4 years after signing the deed.
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