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The Trust Deed is a method used for easy clearance of debts. Regularly elsewhere for lessening and time bound pay off of debts, debt management program is sought by the debt ridden person. But Trust Deed is quite different from any debt management. While in debt management there is complete payment of the debts in a certain period and usually involves a fresh loan, in Trust Deed the emphasis is on making an accepted debt clearing plan legally binding to the lenders.

Generally Trust Deed is chosen for when a debtor has come to worst financial situation where he can no longer pay for the clearing debts. In such a case the debtor usually files for bankruptcy. But Trust Deed enables in avoiding bankruptcy. In other words Trust Deed is a respectable alternative for bankruptcy.

The Trust Deed may be registered as protected; this prevents creditors from taking further steps e.g. sequestration (bankruptcy) to recover debts due to them. Under Trust Deed, the debtor makes a proposal to his creditors for paying off the debts in an agreed period. But the preparing of the proposal requires a careful calculation of debtor’s financial position. The proposal is sent to the creditors for their suggestion and on the base of a variety of suggestions if any, the proposal is redrafted and is sent again to creditors. When the proposal is accepted and signed by the creditors, it becomes a trust deed and is legally binding on all creditors.

While drafting the proposal, licensed insolvency practitioner makes it sure that the amount of debts mentioned in the proposal is payable for the debtor. To do this, the practitioner ensures that after paying debts, the debtor still has enough amounts left for meeting routine expenses.

The advantages of a trust deed are that it can relieve the stress from the creditors as all correspondence and queries are dealt with by the Trustee. It puts the debtor in control of their financial situation rather than the creditors. A Trust Deed is usually more flexible and costs less to administer than sequestration. It also allows the debtor the right to hold certain public offices - which would not be the case with sequestration. It may be possible for companies to continue trading and individuals to keep their directorships.

Trust Deed, other advantage, is that lenders can not impose any interest rate anymore on the debtor as the main aim of trust deed is to clear the debts and not to take interest. Another big advantage of Trust Deed is that for clearing debts a certain period which usually is of three years is agreed upon and after the length if the debts are still remaining then rest of the debts are written off. This way actually, the debts are cleared easily and with lesser amount.

Trust Deed allows debtors a free of worry life as far as apprehensions of legal action from creditors are concerned. Creditors can not take a legal action against the debtor after they have signed the proposal. All the queries of creditors are handled by the licensed insolvency practitioner who assisted in forming trust deed. In fact it is necessary that trust deed is drafted with the assistance of licensed insolvency practitioner.

So if you stay in Scotland, Trust Deed could be your debt management choice in compromise and legal way.