|
Provided certain conditions are met, the Trust Deed may be registered as "protected", thereby preventing creditors from petitioning for the debtor's sequestration or taking any other steps to recover debts due to them. Financial and personal circumstances vary, so the consequences of signing a Trust Deed will be different for each individual or partnership.
The advantages of a trust deed are that it takes the pressure off as all correspondence and the Trustee deals with queries from creditors. It puts the debtor rather than creditors in control of the debtor's financial situation and reduces the costs - a trust Deed is usually more flexible and less costly to administer than sequestration and allows the debtor the right to fulfil certain public offices - which would not be the case with sequestration.
The disadvantages are that existing arrestments and other diligence continue to be effective, home owners may be forced to sell if creditors cannot be paid in full from other sources and debtors cannot trade on their own account or hold directorships of a limited company.
If you are unsure which step to take to solve your debt problems, please feel free to call one of our advisors to ask our opinion. This is a totally free and confidential service.
TRUST DEEDS
Sequestration is not the only solution for people with serious debt problems.
Granting a trust deed, by which a person voluntarily transfers some or all of his or her assets to a trustee to administer on behalf of the creditors, is both less formal than sequestration and may also avoid some of the legal disabilities which follow from being made legally bankrupt.
Provided it meets certain conditions, a trust deed may be recorded in the Registrar of Insolvencies as a 'protected trust deed'. This prevents a creditor from petitioning for the debtor's sequestration so long as the person granting the trust deed abides by its terms.
Whilst signing a trust deed is less formal than sequestration, it is nevertheless a very serious step to take. Granting a trust deed is a voluntary act but once a person has signed a trust deed he and the trustee are legally bound by it.
|
|
