What is a trust deed and how does it work?
Posted on: 01 December 2018 by Amina Khan
Bankruptcy is not a reliable solution for people with serious debt problems.
A ‘trust deed’ is a voluntary agreement with your creditors to pay back part of what you owe them. It is less official than bankruptcy and may also avoid some of the legal limitations which follow from being made bankrupt.
A trust deed may involve transferring precious things that you own to a trustee so that they can be sold to lift money to pay to your creditors. A trust deed will frequently involve you making a contribution from your income. If you place a trust deed on or after 28 November 2013, it will last for four years. After this time you will no longer be responsible for the debts included in the trust deed. This is called being ‘discharged’.
Benefits of Trust deed:
- There are a number of advantages of trust deeds. First, you don’t have to deal with your creditors and they will no longer be able to make contact with you to try to recover their money.
- The debt also becomes more convenient as you make only one monthly payment, which is reasonable and frozen.
- In addition, you know that you will be discharged from the arrears after four years, so it will not weigh you down without letting up.
- still, a trust deed is a type of insolvency so there is serious repercussion to the agreement. It will, for example, stay on your credit file for six years, making it almost impractical to obtain further credit during that time.
- It will also be recorded on the Register of Public Insolvencies.
- It could involve your career, too, as some professions forbid their members from signing up to a trust deed.
Take advice before involving into a deed
You need to think about the pros and cons of a trust deed before you enter into an trust deed agreement. It’s also a good idea to look for advice. Organizations can help to explain trust deeds and, crucially, they don’t charge for their support.
Prevent your creditors
Providing it meets convinced conditions, a trust deed may be recorded in the Register of Insolvencies as a ‘protected trust deed’. The Trust Deed prevents your creditors from taking further action against you to get their money back, as long as you attach to the terms of the trust deed. If you are also suffering from bankruptcy then this is not the final option. You can take the help of an insolvency practitioner who will take you out from the situation. A trust can help you a lot to solve your debt. There are many other benefits of registering a trust deed in the situation of insolvency. A protected trust deed is also a part of trust deed but it is quite different in term or legalization.
If you are in serious debt finding a way to get y yourself out of this way then a trust deed can be the best option to go with.