Every day you read about the fate of cash strapped companies around the world who are trapped in the clutches of bankruptcy. They have outstanding amounts in the form of loans taken from banks, financial institutes and individuals taken at very high interests. When they fail to pay them off on time, they use their business and assets as collateral. Many times they just disappear into thin air without repaying the loans.
If you are up to your neck in debts you can’t pay off, then the only legal way to get relief is filing for bankruptcy. Many schemes are available for those with multiple assets and options.
Debt Arrangement Scheme
A Debt Arrangement Scheme is available only for those who reside in Scotland. It is managed by the Government of Scotland as an alternative to bankruptcy. According to this scheme, the victim can extend his/her period of repayment and be immune to any legal actions taken by lenders.
Scottish Trust Deeds
According to Scottish Trust Deeds, a Scottish resident can formally make arrangements to clear his debts in a convenient manner. He can payoff the loans with an affordable rate of interest over a long period of time. This is structured to benefit both the lenders and the bankrupt. Generally, the agreed period of time is 36 months after which the creditors will write off the remaining amount. The monthly payment made by the victim will be equally distributed among the lenders.
What are the benefits of Trust Deeds?
Trust Deeds help a person emerge from bankruptcy easily. As per the deed, the debtor is offered a specific period of time to clear his debts. Once the deed comes into effect, the interests and other charges levied on the borrower will be stopped. The best part is that the debtor is aware of the repayment period and does not have to struggle to repay the entire amount in one go.
Though a Trust Deed is a good alternative to bankruptcy, it is not for everyone, and not everybody is eligible. Your outstanding debt amount must be at least £8000 owed separately or in combination to all the creditors. You must also have a permanent income source from which you can make monthly payments.
IVA Debt Management
Opting for IVA is another good option for people involved in bankruptcy. It is flexible in terms and conditions. According to this program, the debtor and the creditor/s enter into an agreement, which proposes easy options for the victim of bankruptcy to repay the loans without much fuss. To find out if you qualify for the process and what the terms are, you must contact an IVA expert who can evaluate your finances and offer you a suitable solution. If you qualify for it, your details will be passed over to an Insolvency practitioner who will take care of the rest of your case.
PPI or Payment Protection Insurance is also referred to as loan repayment insurance or credit protection insurance. This option is offered by banks when they issue credit cards and other financial products. If the account holder gets into an accident or due to any other circumstances becomes bankrupt and is unable to pay off his loans, the PPI will help with the loan repayment process. CPP reclaims is a similar policy, which provides affordable solutions to individuals drowning in debt.
Mis-sold Mortgage is one situation that could lead you into bankruptcy. If you are a victim of such a scheme, you must follow the three steps that follow:
1. Collect and consolidate all the documents and relevant materials that relate to the mis-sold purchase or acquisition. Also, try to show concrete facts of the details that caused your problem.
2. File a complaint against the financial services advisor who offered you the wrong investment or mortgage. Don’t forget to get a copy of business’s in-house grievances procedure.
3. Once the complaint is raised, the other party will have eight weeks to get back to you. If the other party fails to respond, there are other processes that could help you to pursue the case. Your lawyer will guide you through those processes.
Role of Pension Transfers & Life Insurance in Bankruptcy
There are certain pension plans and Life Insurance policies that cover bankruptcy to some extent. When you declare yourself as bankrupt, then your pension will be considered as an asset that can be liquidated against the loans; however, there are a few clauses that determine it.
Insurance policies that consist of a value, which could be surrendered for cash will be lost against bankruptcy and repaying debt. They are considered hard core assets in this case and become a part of your estate and property. If you have a joint holder (your spouse or partner), you need to talk to him or her and the trustee about their share because bankruptcy should not affect them in any manner. Talk to your Trustee about the pension and Life insurance policies you hold and how they can influence your debts.