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Understanding How Trust Deeds and Sequestration View Secured and Unsecured Debts

Sharon McDougall - Updated - 30th April 2024 - 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.

What is the difference between an unsecured or secured debt?

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

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Which unsecured debts can be covered by a trust deed or sequestration?

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

Which secured debts cannot be included in a trust deed or sequestration arrangement?

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

Which types of debt cannot be covered in a trust deed or sequestration?

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

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.

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Sharon McDougall


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