Quick and Easy Fix for Your Failed Trust Deeds
Posted: Feb 17, 2019
Trust Deeds are a legally binding agreement between you and your creditors to make set repayments over a period of four years. At the end of this period your unsecured debts would typically be written off. When they work, with all repayments made, Trust Deeds are an effective tool for helping people climb out of debt. But what happens when Trust Deeds fail? If you’re in this situation, we want to begin by saying this – there are still debt solutions out there that can help you. Let’s guide you through the process.
Trust Deed not yet failed? Here’s what to do …
If you’re struggling to keep up with your Trust Deed repayments, it’s critical that you speak with your advisor as soon as possible. They are there to help you and may even be able to renegotiate lower repayments if your circumstances have changed. You may also be eligible for a payment break of one month if you can show them that it would help you to continue with the remaining repayment schedule.
However if your Trust Deed has already failed, you’ll need to seek an alternative debt solution. Let’s now look at what your options may be.
How to quickly and easily fix your failed Trust Deed
A Trust Deed fails if you stop paying it and default on your agreement. When your Trustees feel that you cannot or will not continue with repayments, they then terminate your Trust Deed. This will mean that:
- Your creditors can begin to contact you again
- Your Trustees may petition the court for you to enter Sequestration (e.g. the Scottish equivalent of bankruptcy)
- Any fees and interest that were frozen as part of the Trust Deed will no longer be frozen, and your total debt could begin to climb again
- Your creditors may believe that you have no intention of repaying your debts, and could petition for Sequestration, or they may apply for a wage arrestment or an alternative court order
To avoid these actions, you’ll need to find a suitable debt solution. Here are some of the most common options…
If you own personal items, a vehicle or property that has significant value, you may want to consider selling these assets to reduce or repay your creditors.
As the Trust Deed process takes stock of any assets prior to being set up, selling assets will only be a suitable option to a failed Trust Deed if you’ve suddenly acquired a valuable asset. Read more about Selling Assets as a debt solution.
Debt Management Plan
A Debt Management Plan (DMP) is a form of debt solution that is similar to a Trust Deed in that it involves a repayment schedule that’s created according to your income and expenditure.
With a DMP, you would make monthly repayments to your creditors via a DMP debt agency, which acts as the ‘middle man’.
However, unlike a Trust Deed, your creditors may not agree to freeze the interest and surcharges on your debt. Read more about Debt Management Plan as a debt solution.
Debt Arrangement Scheme
A Debt Arrangement Scheme is a debt solution that is ran by the Scottish Government. It involves a Debt Payment Programme (DPP) which allows you to repay your creditors over a realistic time frame given your circumstances.
Just as with a Trust Deed, your creditors are required to agree to your repayment proposal.
To be eligible for this debt solution, you’ll need to have an income that either equals or is more than your monthly expenditure.
Sequestration should be thought of as the final debt solution you consider. Like bankruptcy - the equivalent in other regions – this debt solution has long standing implications on your credit worthiness. During the period of Sequestration, your details will be readily searchable on a publicly accessible online register. Even when the Sequestration is discharged after 12 months, you will still need to disclose your past Sequestration when asked by future creditors, insurers or employers.
Sequestration is also only suitable if you have debts that you would be unable to repay within a reasonable period of time.
Darren Burgess has many years of experience in the field of debt help. Visit National Debt Help for more information, guidance, and tools on how to get out of debt.