Repay all your unsecured debts through Trust Deed
If you are struggling hard with debts and you feel financially broke, then you may opt to get help with your debt through the method of trust deeds. The following sections will explain the details of a trust deed and how can you decide whether it will be the best suited option for you or not.
A trust deed or also known as a deed of trust refers to formal agreement which comes into play when there has been a transaction of loan from one party to the other. Trust deed UK basically is a formal agreement between a creditor and a borrower that is designed in a way to reduce the overall amount of debts to be repaid.
The tenure of a trust deed UK usually lasts for a period of around four years and at the end of this period, the unsecured debts are usually written off by default. But you can only sign up for trust deeds if you owe a debt of more than £5,000 and can afford to make a regular monthly payment throughout the repayment period. But the amount of your unsecured debts should exceed the value of your assets like houses, vehicles etc.
If you avail the National Debt Help or any other citizens advice debt help, they will help you get in touch with the trustee, an insolvency practitioner. The trustee will be responsible to take care of your agreement and ensure your creditors stick to them throughout the repayment period. They will even coordinate with your creditors and you don’t have to deal with your creditors directly.
Although trust deeds can be one of the best options of debt repayment for the people living only in Scotland. The alternative for trust deed in countries like England, Wales or Northern Ireland is an individual voluntary arrangement (IVA).
Under trust deed, the team of Citizens Debt Help UK will help you get into an agreement with the creditor. Accordingly, you can then make a monthly affordable payment for the tenure of repayment. After the repayment is over, you won’t be liable to repay any debt amount to your creditors.
If you reach out to the team of citizens advice debt help or other national debt help team to get any sort of debt help, they need to analyse multiple factors before advising you to go for trust deeds. Even before consulting them and get other government debt help, you can even figure out yourself whether trust deed can be the best option for you or not. Since trust deed UK is a formal and legal debt solution, one needs to fit into certain eligibility criteria to make themselves qualified for it.
Following are the basic eligibility criteria to get into deed of trust:
- Being a resident of Scotland: The option of getting deed of trust is only available to the residents of Scotland. Either you have to be a permanent resident of Scotland or you should have at least stayed there for the last 12 months before you plan to opt for trust deeds. Sometimes, if you are not a resident but you owe a business in the country, then also you will be considered for trust deeds.
- A minimum amount of unsecured debts: Whether you apply alone or jointly with a partner for trust deed UK, you need to have at least an amount of unsecured debts of £5,000 or preferably more.
- Commit to pay the regular monthly payment: You should be able to make the affordable monthly payment without fail. After paying all other bills and taxes and meeting all other financial commitments, you should have enough money left from your income that will help you pay the monthly amount.
- Must be an insolvent: Being an insolvent means you need to have an amount of debts that will surpass the value of your assets. Moreover, you need to be in a situation where you won’t be able to repay your debts in full in under 48 months.
- No absolute income from benefits: Your income should not solely come from benefits. You can pay using the income deriving from benefits belongings and properties but not solely from benefits. Moreover, to get a trust deed, you won’t even be allowed to derive any contribution from benefits either. Your non-benefit income should be more than amount to be paid. Although, you can sell your properties and assets like car and house and use your other savings and investments to repay under trust deeds.
- No record of bankruptcy: There should be no record of bankruptcy in your name for a minimum period of the past five years.
Applying for a trust deed may appear a bit challenging and confusing as well. While you avail the free debt help, the team of financial advisors working for the citizens debt help UK will surely explain you the whole process. But in this section, we have simplified the whole process and explain it to you. You can get the basic idea about the procedure of trust deed.
Step (1): Before you plan to apply or even before approaching any national debt help team, you should have a detailed knowledge about your income and other earnings and related expenses. You should be well versed with your financial commitments excluding the debt that you owe. Finally, you can have a concrete detail about the net money inflow and outflow involved.
Step (2): Get in touch with the team of citizens debt help UK. You can either avail the free debt help service from government debt help team or other financial organizations working independently. You can talk to one of the financial specialists and be ensured that your details of conversation will be kept in absolute confidentiality. Such consultancy is available both online and offline. You can either opt for online chat or telephonic calls or you can meet in person.
Step (3): The financial advisor will analyse your current financial condition and other commitments. Based on that they will suggest you whether trust deed can be the best possible solution to deal with your debts or not.
Step (4): If the financial advisor figures out that trust deeds can be the best possible solution for you, they will help you plan its payment procedure accordingly. First, they will help you decide the amount of monthly repayment so that it is affordable by you and your other expenses and financial commitments don’t get hampered.
They will also help you understand how your assets will be or can be treated during the tenure of repayment. Finally, with their help, you can create your proposal. The financial advisor will also get you in touch with the insolvency practitioner or the trustee who will carry the process further.
Step (5): Once you are absolutely confident to proceed with the trust deed, your insolvency practitioner will draft the terms and conditions of the agreement that will be produced as a proposal to the creditors. Once, you are satisfied with all the clauses mentioned there, you need to sign the agreement.
Step (6): Once you have signed the trust deed, your trustee will then approach your creditors. Their responsibility will be to convince the creditors to agree to the terms and conditions mentioned in the proposal. They will inform the creditors about your earnings and current financial conditions and convince them to agree to the proposed amount of monthly repayment. The proposal is usually sent to the creditors within seven days.
Step (7): If your creditors agree to all the terms and conditions mentioned in the proposal and signed that, your deed of trust UK gets protected. If more than one third the total number of your creditors agree to the proposal, it gets protected by default.
Once the creditors have received the proposal , they are given a period of around five weeks to review it. Accordingly, they can decide whether to accept or reject the proposal. If they don’t revert within those five weeks, it is considered to be accepted on their end.
Step (8): Then you need to get your trust deed registered on the Accountant in Bankruptcy (AIB) Website. This website is accessible to your creditors and they can access it to get all the details about your trust deeds.
Step (9): Once you have made your first payment through deed of trust and it has been registered as protected, you are safe. After that, your creditors are legally bound, and they can’t take any legal actions against you.
Moreover, your interest and other charges are frozen by default. Finally, the unsecured debts remaining get written off at the end of the repayment period.
A trust deed is said to be protected, when your creditors are legally bound, and they don’t have the provision to chase contact you directly or chase you or bother you for money. They can’t even add any interest or other surplus charges to your existing debts once the payment process has been agreed under the protected trust deeds.
Moreover, as long as you are making the regular monthly payment as per the amount mentioned in the agreement, they can’t even take any legal actions against you and nor they have the provision of making you bankrupt.
While you sign up for a trust deed, in most of the cases, your insolvency practitioner will try to ensure that your trust deed UK gets protected. The trust deed advice team will take all possible measures so the chances of getting your trust deed protected get maximized.
Although, if you fail to stick to the conditions you have agreed upon in the proposal, then your assets and properties could be at stake. Under such a situation, a creditor may overpower you and may initiate sequestration proceedings like bankruptcy against you.
To figure out whether the debt arrangement scheme Scotland could be the right choice for an individual or not, one can check out the eligibility criteria for the same. The following criteria should be fulfilled to be eligible for the DPP under DAS:
- Must be a permanent citizen of Scotland
- Are indebted to multiple creditors or owe multiple debts to a single creditors
- Must have the financial strength and resources to afford the amount for periodic repayment
- The monthly disposable income of the individual should not be less than £100
- The individual is unable to afford the current repayment level but should be able to afford the full repayment over a prolonged period.
While you sign up for the DPP under DAS, you have to maintain the monthly repayment procedure and pay the decided amount on time. 10 per cent of the affordable amount will be retained as the administration cost. Out of that 10 per cent cost, 8% is assigned for the payment distributor. Remaining 2 per cent is sent to the Accountant in Bankruptcy.
Even if one fulfills all the above-mentioned criteria, yet one can’t go for DAS if they have these following obligations:
- Already into Protected Trust deed Scotland
- Not discharged after being declared bankrupt
- You are being time-bound to pay directions or orders
- Have debt obligations under a conjoined arrestment order.
Thus, if any of these factors are applicable in your situation, DAS will be denied to you.
On the other hand, if you fulfill both these conditions:
- fitting into the eligibility criteria and
- not having the other mentioned obligations
you can go for DAS for the repayment of unsecured loans or debts…
- Following unsecured debts can be repaid using the DPP under the DAS
- The debt against credit card and store card
- Bank overdrafts
- Personal loans
- Payday loans
A deed of trust can either be a protected one or an unprotected one, although at times there are voluntary trust deeds as well. When a trust deed is legally bound in a way that it prevents your creditors from contacting you directly and also from taking any legal actions against you, it is considered as a protected trust deed. A trust deed only gets protected if majority of your creditors have agreed
On the other hand, a trust deed is considered to be unprotected when less than one third the total number of your creditors has agreed to your proposed agreement and majority of them have rejected that. Thus, the creditors can take legal actions and opt for other means to recover the amount you owe to them as debts. Although, insolvency practitioners working with the debt help team usually figures out a way for you to make trust deed protected.
While in voluntary trust deed, a trustee gets the right over certain assets and possessions of the debtors and if needed they can sell them to repay the creditors. A voluntary trust deed UK usually demands a certain fraction of contribution from the income of the debtor for a period of usually 4 years (tenure of repayment).
Trust deed UK usually helps you to deal with your debt problems arising from your unsecured debts. Unsecured debts are those loans and debts that are usually not backed by any collateral. Thus, if the debtor fails to repay the loan, there is hardly any way out for the creditor to recover the amount. The unsecured debts that can be paid through trust deeds include:
- Credit cards bills
- Bank overdrafts
- Utility Arrears
- Bank Loans
- Store Cards
- Credit Union Loans
- Payday Loans
- Guarantor Loans
- High Cost Loans
- Council Tax Arrears
- Joint unsecured debts you owe for business or family reasons
- Debts you owe to family, friends and acquaintance
- Debts resulting from various gambling activities
- Debt you owe to debt purchasers and debt agencies
There are various reasons the citizen debt help team will recommend you go for trust deeds. Some of the major advantages of the trust deeds include:
1. Maximum debts got written off
Trust deed not only reduce the amount of debts to be repaid to your creditors, but it also helps in writing off of the remaining unsecured debts once the tenure of repayment is over. Although rare, but at times as much as 90 percent of your unsecured debts can be written off at the end of the repayment period.
2. Deals with HMRC and other household bills
Payment for HMRC and other household taxes can be incorporated under the trust deeds and thus, the debtor will be free from the responsibility of those bills.
3. Constant Help from an Insolvency Practitioner
Once you avail the debt help from any team of citizen debt help UK, an insolvency practitioner will be appointed. He/ she will be in constant touch with you and will be responsible all the activities involved. Be it preparing the proposal for trust deed or convincing the creditors or making monthly payments, he/she will take care of everything. He will guide you thoroughly till the tenure of trust deed is over and you are debt free.
4. Affordable monthly payment
The agreement will be prepared in a way that will be convenient for you. You can choose the amount of monthly repayment as per your affordability. This also helps you in maintaining your financial stability.
5. No chasing calls from creditors
Trust ensures your legal protection from the creditors. Once your trust deed gets protected, none of the creditors can get in touch with you directly and they have to communicate through your insolvency practitioner.
6. Assets can be retained
Despite being an insolvency practice, trust deed UK have better provisions of safeguarding your assets. Your trustee will help you protect them. You can retain your major assets like your home and other properties unless the level of equity is extremely high.
7. Ensures legal protection
Sine it is a legal and formal agreement, it prohibits the creditors from taking any legal actions against you. Thus, there will be no sequestration or bankruptcy against you. Moreover, if your key assets are under the control of the trustee, they will automatically be transferred to you after the trust deed has run its course.
8. Great way to repay unsecured debts
Trust deed is often considered as an ideal way to cope up with debts problems arising from unsecured debts. Be it store cards, credit cards, personal loans or utility bills, trust deed will work to your benefit and help to get over with such debts.
9. Be debt free
Unlike other debt solutions, trust deed allows to pay some of your debts and help get the remaining written off completely. Thus, getting debt free is always assured once you opt for trust deed.
10. Best suited for regular income people
If you have a regular monthly income, trust deed could be one of the best options for you. You just need to pay a partial amount of your monthly income and get debt free in a few years.
11. Lesser grave consequences
It is way lesser risky to go for trust deed as compared to bankruptcy and sequestration. There is no serious consequences involved either. Most importantly, unlike bankruptcy, your employment and professional life won’t be affected.
12. Help you deal with high amount of debts
Trust deed UK help you deal with huge amount of debt. If the amount of debt is more than £5,000, trust deeds can help you repay that.
Like every other debt solution, trust deed also has its own pros and cons. Before you decide to opt for trust deed as a method of debt repayment, the trust deed advice team will explain you the disadvantages involved in a trust deed.
- New asset claimed by trustee: If you have handed over any assets or properties to the trustee to pay your debts off, there is always a chance that the trustee can claim them as a mean to repay.
- Challenging for business owners: If you own a business and enjoy specific banking facilities for your business, the ban may withdraw or stop some or all theses facilities after you get into trust deeds. It also gets problematic to open new banking account elsewhere after you get into trust deed agreement.
- Credit gets affected: Once you have signed the agreement, you won’t be able to get new credits during the tenure of repayment. In fact, in some cases, you may fail to avail new credits even the period of four years of trust deeds has ended. The period of not getting credit may extend up till six years.
- Can’t prohibit previous court action: If there is any previous court actions happening against you related to debt repayment, getting into a trust deed agreement won’t stop it.
- Unavailable for secured debts: Trust deed can only solve your debt problems related to your unsecured debts. So, if you have a large amount of unsecured debts, trust deed won’t be of any use.
- Certain professions may be at stake: Although, getting into an agreement of trust deed usually don’t affect your profession, but if you are in some specific professions like banking, accounting, law practicing, there is a chance of your career getting affected.
As mentioned previously, trust deeds like all other debt solutions processes also has its own advantages and disadvantages. When you avail the debt help service, be it a national debt help team or independent debt help organizations, they will explain you how the process can impact your life. Even if it is the best possible debt repayment procedures for you, you should have an idea about its probable consequences. Things that you should keep in mind while applying:
- The details of your trust deeds will be recorded on your credit file from the very first day the process will be initiated. The records will be available for the next six years. Thus, it may get difficult for you to get credits during and a few years after the deed of trust period is over.
- There is a charge for getting your trust deeds and continuing it. Even if you have opted for trust deeds though free debt help services, you will have to pay a fee to the insolvency practitioner who will be handling all the procedures and the interactions with the creditors.
- In case, you fail to stick to the terms and conditions mentioned in the agreement of the trust deeds, and the trust deed ends or fails abruptly, there is always a probability of ending up being bankrupt. The creditors may take legal actions as well against you.
- You always need to plan your financial commitments very carefully during the repayment tenure. Even if there is any change in your income, you will still have to stick to the agreed amount of monthly repayment.
- The public register namely Register of Insolvencies (ROI) will have the records of your trust deeds for five years and it will record all the details. of the current protected trust deeds.
You may end up losing your valuable assets while you are reaping your debt.
The highly experienced financial advisors working for the Citizen Debt Help will guide you thoroughly and give you the best trust deed advice. They will help you get in touch with some of the most efficient trustees or insolvency practitioners who will help you get your trust deed protected.