A trust deed is a form of liquidation, so the unsecured debt needs to outnumber the value of the assets, for example, vehicles or houses. Unsecured debt includes store cards, unsecured loans and credit card debt.
Image source: assets.publishing.service.gov.uk (These statistics released by GOV.UK provides the latest information on company insolvency in Scotland (companies that are unable to pay debt and enter liquidation or enter supervision or some other company recovery process).
Trust deeds are only available if you reside in Scotland. If you live in Northern Island, Wales or England, an IVA (Individual voluntary agreement) is a solution, but it is worth noting that it has different risks, benefits and charges associated with it. A Trust Deed from Carrington Dean can certainly help you get out of the debt swamp by walking you through the whole procedures and methods. Further, let’s find out what are the benefits and risks of trust deeds so you can make a well-informed decision to entering it.
Benefits of Trust Deeds
- With the assistance of an IP (Insolvency Practioner), you plan repayment schedules to the creditors over four years. Right after this, any remaining debts are wiped off
- When the trust deed qualifies, the creditors will not push you for making payment or increase the charges and interest to the debt, and they cannot take any legal action
- As you may need to sell some properties, you are usually able to keep one vehicle worth less than £3,000
- Even though a protected trust deed is usually a proper debt solution, there’s no need to appear in the courtroom
Risks of Trust Deeds
- An Insolvency Practitioner usually takes charges for his service out of your monthly payment for the trust deed. Therefore it is important you comprehend exactly what percentage this would be
- A trust deed can have an impact on the particular terms and conditions of your employment; if you are worried about this, you ought to check your agreement or discuss with the HR department
Other Points to Consider with Trust Deed
While making a final decision on whether or not to sign a trust deed, it is best to get expert debt assistance because there are a number of factors to consider, such as:
- Your trust deed is a legally binding arrangement between both you and your creditors
- As long as you adhere to the terms and conditions of the trust deed, the creditors will not take action to recover your debt or make you insolvent
- You will have to check if it will cause problems for your employment. A trust deed is actually a form of liquidation and having one may result in dismissal or disciplinary action against employment, such as those in the legal profession or financial services
- If you are provided with a trust deed and you rent any property, the landlord may terminate the tenancy agreement