Whilst not suitable for everyone a Trust Deed is a solution that can help clients with debts going through difficult times, and possibly helping to avoid the severity of bankruptcy (Sequestration). It is a legally binding agreement with your creditors which normally lasts four years. During this time you pay back what you can afford on a monthly basis, based upon your financial circumstances. This may include releasing some assets, as well as, regular contributions from your income. The Trust Deed usually includes a degree of debt forgiveness which varies from case to case.
Assessment of suitability for a Trust Deed will require a full disclosure of assets, liabilities, income and expenditure. In return the creditors will write off a percentage of your debt; this will never be more than 90% of what you owe.
Every case is based on an individual assessment and no two cases are the same. Therefore, the more accurate the information you provide to us, the greater the chances of the Trust Deed succeeding.
There are different stages of the Trust Deed that you need to follow:
- Assessment over the phone with an Insolvency Practitioner (Trustee)
- Assess paperwork on return
- Consultation call
- Trust Deed approved/declined
- Protected Trust Deed
How much do you have to pay?
This is dependent on your individual income and expenditure. You are expected to pay the extra into the arrangement and the Trustee will pay the collected monies to the creditors.
The arrangement can fail if you do not maintain your part of the bargain. It is important to be realistic about what you can afford to avoid the agreement breaking down at a later stage.
A Simplified Example of a Trust Deed with your situation:
If your debt level is £20,000, you do not have any assets, and your disposable income level is £250 per month, that is the amount payable every month for the four year period. From those contributions we take our fees and pay the balance to the creditors. As part of the agreement the creditors will then write off the remaining balance owed.
Debt level = £20,000
Term- 48 months @ £250 = £10560 resulting in approximately 53% of your total debt level being written off.
What is a Trust Deed
|Once the Trust Deed has been completed, your debts are written off.||Payments must be made on a regular basis for the full duration.|
|Interest and charges are frozen for the entirety of the three year term.||You will not be able to obtain any further credit during the Deed.|
|By law your creditors cannot contact you, throughout the Trust Deed.||Failing to adhere to the terms of the Trust Deed could result in forced sequestration.|
|You will know when you are going to be debt free.||If you earn more, you may need to contribute more.|
|It gives you one affordable monthly payment.||You may need to release equity in any assets you hold at the end of the term.|
|Avoid Sequestration.||A Trust Deed will appear on your credit report for a total of six years.|