Understanding How Trust Deeds and Sequestration View Secured and Unsecured Debts

  • John Baird -
  • 4th December 2013 -
  • 2 minutes to read

If you’re a Scottish resident struggling with personal debt and you’re considering a trust deed or sequestration as possible solutions, it’s important to realise that some types of debts cannot be managed within a formal insolvency procedure.

Below, we’ll discuss the types of debts that can be accepted into a trust deed or sequestration – and potentially be written off.

In any insolvency procedure, the only liabilities that can be written off are unsecured debts.

Understanding the difference between secured and unsecured debts can help you determine how much of your debt can be managed through a trust deed or sequestration process.

The primary difference between an unsecured debt and a secured debt lies in whether you used property or assets to secure the debt.

  • If you used any of your assets or belongings as collateral in order to obtain approval for credit or a loan, then it is considered a secured debt. The asset you used as collateral is referred to as a ‘security’ because it protects the creditor from the possibility of taking a loss in the event of default. Neither a trust deed nor a sequestration process can be used to manage or reduce a secured debt.
  • An unsecured debt is not obtained through the use of a security (collateral), so the creditor has no right to seize assets if you fail to make payments. If you default on an unsecured debt, the creditor may pass the debt onto a collection agency or take you to court. Any unsecured debt can be covered by a formal insolvency procedure.

Examples of unsecured debts, which can be covered by a trust deed or sequestration:

  • Credit card balances
  • Payday loans
  • Medical bills
  • Catalogue accounts
  • Overdrafts
  • Unsecured personal loans

Examples of secured debts, which cannot be included in a trust deed or sequestration arrangement:

  • Mortgage loan
  • Vehicle loan
  • Non-recourse loans
  • Student loans

In addition to secured loans, there are other types of debt that cannot be managed using a trust deed or sequestration arrangement. These include:

  • Court-ordered fines and penalties
  • Forfeiture orders
  • Child support
  • Ailment obligations

The above examples are by no means exhaustive; there are other types of secured and unsecured debts but we’ve covered the most common. If you’re still curious about which debts you’ll be able to manage using a trust deed or sequestration, or if you have questions about any issue related to insolvency in Scotland, contact Scotland Debt Solutions today.

John Baird
John Baird
Partner
About

Why Choose Us

Speak Direct With
Speak Direct With
A Qualified Adviser
We Dont Operate
We Dont Operate
Call Centres
5 Offices in Scotland
5 Offices in Scotland
National Coverage
Ask us About
Ask us About
We Do Home Visits
Fully Regulated Advisors
Fully Regulated Advisors
From a Reputable Firm
Helping Scots Get
Helping Scots Get
Out of Debt Since 1989

We'll give you a call

Our Scottish based team can help advise you on your debt problems.

When should we call?
Can we leave a message?
Here at Scotland Debt Solutions we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See our Privacy Policy.
Tools

Useful Tools

Personalised Debt Report

Personalised Debt Report

Our personalised debt report will help you better understand your financial position and see where your money is going.

Free Scheduled Call

Free Scheduled Call

 Arrange a call with an expert advisor at a time to suit you.

Find a Local Office

Find a Local Office

We have five offices located across Scotland. Find your nearest one here.

Close Menu Share with a Friend

Send this page to a friend

via Whatsapp via Messenger via Messenger via Email
Make sure you have WhatsApp installed.

Copy link to clipboard
Close