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Scottish Trust Deed Forum
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Topic starter
02/08/2015 12:54 pm
I dealt with a trust deed where the debts arose due to the failure of a business venture.
On starting up the business, the guy obtaned some bank funding in addition to a loan from his wife of £20k. Paperwork was produced with the terms of repayment etc to confirm that this was a loan and not a gift. It was checked and witnessed properly.
Following the failure of the business and seeking advise on trust deeds/sequestration he provided a full list of creditors including his wife, who was the largest creditor. The projected calculation resulted in an estimated 32p in the £ return to creditors.
Unfortunately in both Trust Deeds and Sequestration, the loan provided by his wife is viewed as a Postponed debt which means that they will only receive a payment once the costs and outlays are paid and the remaining unsecured creditors are paid in full plus interest. In effect, she will receive nothing as her claim will sit at the bottom of all other creditors.
I always thought this was a harsh bit of the legislation, although fortunately I've only come across it 2 or 3 times.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
03/08/2015 9:04 am
Thanks for sharing that Mark.
I guess it will be irrelevant to the vast majority of people who are worried about their debts, but very important to the relatively small number of people who are affected.
Where is the line drawn? For example, would the same considerations apply to a loan from a parent or sibling?
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
03/08/2015 10:31 am
Hi TDA
Family loans are quite common, however these tend to be more from parents rather than husbands & wives fortunately.
The legislation specifically limits the postponed debts to loans from their spouse or civil partner.
One which I dealt with previously, the couple were in the process of divorcing, so the news that he didn't even rank as a creditor I'm sure made things far worse behind the scenes.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
