When a debt ridden person is no longer in a sound financial health for regularly paying various loan installments to different lenders and if the water is above his neck, there is only one option left for him--- declare him self bankrupt. Though bankruptcy may keep the nagging creditors at bay, but any loan availing in future is blocked and that may result in acute shortage of money for many years. A more respectable and effective way to the problem of debts is Scottish trust deeds. As is clear by the name, Scottish trust deeds are meant for the people of Scotland.



There is a vast difference between Scottish trust deed and a debt management program. A debt management program essentially requires debtor to pay off all debts in whatever duration and a fresh loan is often taken for the purpose. Scottish trust deeds are more beneficial to the debtor as the debts are cleared in a specific duration and easy terms-conditions are set with mutual consent of debtor and creditors.

Like any trust deed, Scottish trust deeds are formed with mutual consent of debtor and his various creditors. The main aim of the trust deed is to help debtor in paying off the debts and therefore all efforts are focused towards it. The trust deed is made and signed in the presence of a licensed insolvency practitioner. Licensed insolvency practitioner involves him self directly in the debt matters and is chief architect of the deed.

While preparing a proposal for the creditors on behalf of the debtor, the insolvency practitioner makes it sure that the amount mentioned in the proposal for paying the debts is convenient for the debtor. To arrive at the comfortable debt amount, the practitioner looks into the surplus money position of the debtor. The surplus money is the one that is left with the debtor after paying for routine expenses. This means the debtor does not suffer while paying the debts under the trust deed. This way the deed clearly places the debtor on driver seat. It is the current financial position of the debtor that decides the amount of debt to be paid and not the total debts.

One feature of Scottish trust deeds is that there is a set and agreed debt pay off duration in which the debts are to be cleared. The repayment duration agreed is usually three years. This duration matters most for the debtors as if any debt is left after say three years, all those remaining debts are writer off. Thus the debtor in fact pays less than what he owes.

There are many advantage attached in the trust deeds for both debtor and creditors. Creditors can this way gain back their loaned amount which otherwise was near impossible. For debtor, the advantages are that he get rids of the debts at easier terms and pays in fact fewer amounts to the creditors. The creditors under the provisions of the trust deed can not charge any interest rate on debts till the agreed repayment duration. All the queries of creditors are handled by the insolvency practitioner and thus debtor is no more worried on this front.

Bad credit is no hurdle in making a Scottish trust deed as the bad credit debtor is not permitted under the conditions of the deed to take a fresh loan till the debts are paid off in the agreed duration.

The success of Scottish trust deed is almost assured as the deed is formed and signed with suggestions from debtor and creditors. In case a creditor has any objection to the deed then he has to file the objection within five weeks of receiving of the proposal. Moreover such a creditor must hold at least one third of the total debts.

Thus Scottish trust deeds are of great help to debtors in clearing debts at easier terms-conditions. These terms are first prepared taking current financial position of the debtor and than suggestion from creditors are invited for preparing final terns of the deed.