Considerations before going into a trust deed
A trust deed is a completely legally binding agreement that takes place between a debtor and a creditor and the agreement is taken when the individual is absolutely not able to pay off the debts. While the debtor seeks for bankruptcy, this is just one of the solutions for the situation that he/she is facing. But, you need to know that there are different alternatives like trust deeds that are present. The agreement is completely voluntary and thus the creditors might not accept the terms and not sign up for the trust deeds.
In such scenarios the creditors who do not sign up for the trust deeds take alternative means for gaining their money. But most of the times the creditors agree to the deeds because, if the debtors are not allowed the deed, they would become bankrupt and the creditors will not be owed anything. The trust deed offers a fair chance of returning money and thus the creditors agree to the deed instead of making the debtor bankrupt. And at the same time if the creditors agree to the deeds they have to follow the regulations and cannot seek any other alternative means for debt recovery. There are different types of trust deeds. They are as follows:
General deed: This one is referred as the regular trust deed that is taken up by the creditors on a voluntary basis. For this case, the trustee is appointed by the individual who is known as an insolvency practitioner. All the assets are transferred in the name of the person and he/she then manages the assets on behalf of the debtor. After that the agreement or trust deed is signed with the debtors and creditors. When the agreement is completed, the trustee starts discharging the debts of the debtor according to the agreement. This general deed enables a debtor to repay all the debts without undergoing the humiliating process of bankruptcy.
Protected deed: These deeds are actually enforced by the court of law and in these cases, the individual seeks the help of a court to intervene for binding all the creditors within a deed. It becomes the decision of the court to provide a trustee and have the complete supervision of the agreement before the deeds are discharged. The creditors will be notified about the procedures of the trust deed and they will have a time period of 5 weeks to object to the regulations of the deed. If the majority of the creditors do not object with the terms and conditions then the deed comes into action. And if they do not agree, then the debtor can opt for a sequestration by using the objection grounds.
Asset-free deed: The asset-free deed is offered to such an individual who does not have any asset at all. In such cases, the trustee gets a part of income from the individual and makes the payment for the creditors.
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