Declaring bankruptcy UK is a serious step usually taken by those who feel they no longer have any other alternative. Remember, going bankrupt essentially makes you lose control of your assets, so it’s best to truly explore all other UK debt management options before considering bankruptcy. Whe...
A trust deed helps people with money problems clear their debts to make a fresh financial start.
The aim is to agree reduced debt repayments with your creditors each month for a set period and in return they give up chasing the money you owe and stop adding interest and charges to your account.
Providing you keep up the repayments for the agreed term - generally 36 months - any remaining debt you cannot repay is written off.
Setting up a trust deed
The first step towards setting up a trust deed is to discuss your financial problems with a professional insolvency practitioner.
After explaining the details, they will want to do two things before setting up a trust deed:
- Add up all your unsecured debts, like credit cards, store cards, overdrafts, loans and money owed to catalogue shopping firms.
- Assess your income and expenses. Your living costs will be separated from other expenses, like satellite TV, gym memberships and other subscriptions to leave your disposable income.
If your disposable income does not allow you to make your required payments in full to your creditors but does allow you to pay them a dividend of 10p in the £ over 36 months, then a trust deed Scotland may be a realistic debt solution.
The reduced monthly repayment is offered based on your disposable income, so you still have enough money to pay the rent or mortgage and other living costs.
Affordable repayments
Consolidating your unsecured debts is just one benefit of the arrangment - another is your lenders writing off the rest of the money you owe at the end of the three-year term.
Don’t forget a deed is not bankruptcy, but making an agreement with your creditors will go on your credit history and could affect decisions about a mortgage or other finance including whether you can open a bank account.
Homeowners also need to consider the implications of the scheme.
You won’t lose your home because you set up a deed, but a proportion of any equity in your home will have to be paid to the insolvency practitioner running the scheme for the benefit of your creditors.
If you are paid a cash lump sum, you will be asked to pay some or all of it into the scheme.
Protection from bankruptcy
A trust deed adds an extra layer of protection to borrowers facing financial difficulties.
Once the deed is under way, the creditors included in the scheme cannot force you in to bankruptcy, providing you keep to the agreed repayments.
They also have to stop contacting you about the money you owe.
Just as your lenders cannot force bankruptcy, you cannot opt to declare yourself bankrupt to escape paying your debts.
Qualifying for a trust deed
You can only set up a trust deed if you live in Scotland and have no real prospect of paying off your debts within a reasonable time.
Insolvency laws do not specify what a reasonable time may be, but a court would normally suggest it is 10 years.
If your financial circumstances have changed since you took out your credit cars, store cards, overdraft or loans so you cannot meet the monthly payments, then consider a trust deed before you fall further in to debt.
For a number of years I struggled with my debts, I was constantly worried and stressed to the point it was affecting my health. HJS Recovery deal with all of my creditors and for the first time in years I feel relaxed and in control. Everyone at HJS Recovery have been very helpful, approachable and most important of all very respectful.
Miss W from Edinbugh
I would like to take this opportunity to thank all the staff at HJS Recovery for all of your assistance in helping me to resolve my mounting debts problem. The total understanding and professionalism shown to me was truly marvelous and removed all my fears and stress that I was going to become a Bankrupt. I now have my debts under control with just the manageable one payment per month to my creditors and I now can sleep easy on a night.
Mr P from East Ayrshire
The service supplied by HJS Recovery has helped me get my debts in order which has stopped them from getting out of control. There's always a friendly voice on the phone who helps me if there's any problems. Overall it just let's u live a stress free life.
Mr B from Lanarkshire
HJS Recovery have helped to ease the worry caused by the crippling debt I was left with after my marriage failure. I couldn’t see a way to ever be debt free but HJS provided the solution. Throughout the process they were supportive and non judgmental , which helped to ease the strain and if I am honest the shame I felt. I have had couple of glitches along the way and they have supported and been understanding throughout, helping to find solutions and move forward. I can’t thank HJS enough. I can see the light at the end of the tunnel... thank you!
Ms L from Stirling
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