Are you thinking about signing up for a trust deed? Well, here is what you need to know about trust deeds and how they can help you with your dent.
What Are The Benefits Of A Trust Deed?
By getting a trust deed, you can enjoy the following benefits.
- Write Off Unaffordable And Unsecured Debts
Once the repayment period on your trust deed is over, if there are any outstanding and unsecured debts in the agreement, they will be completely written off. Any additional unsecured debt that’s not part of the trust deed will still be outstanding together with any secured debts you might have accrued.
- Affordable Payments
With an ongoing trust deed, all your bills and other living costs will always come out as a priority. You will only pay what you can afford towards the unsecured outstanding debts after paying your monthly bills and other living costs. Keep in mind that your lenders want you to pay as much as you can afford. Therefore, you might have to cut back on some of your expenses.
- No More Demands From Lenders
A trust deed is a legally binding agreement. Therefore, your lenders will not take any further action against you. If at least half of your lenders (at least a third of the debt) have agreed to half of the terms, the agreement is binding. Of course, none of the lenders are guaranteed to accept the terms. However, if you don’t follow through with the terms of the trust deed, you are at risk of filing for bankruptcy.
How Does A Trust Deed Work?
If you have an unaffordable debt of at least £5,000, you should consider signing up for a trust deed with Carrington Dean. Here, you can reduce the overall amount you pay towards unsecured debts every month to a more affordable amount. If after the repayment period (usually 4 years) you have some unsecured debts that you can’t afford, they will be completely written off. During the repayment period of the trust deed, you are legally protected from any further action from the lenders, but you must keep up with the payments.
If you are a homeowner, you will be forced to release equity from your home after signing up for a trust deed. If you are unable to do this (especially because of the impact on your credit rating due to the trust deed) you are allowed to make additional repayments that add up to your total equity.
Is A Trust Deed The Right Thing For Me?
Yes, if you think you will not be able to repay your debts in a reasonable timeframe, a trust deed is the right thing for you. A trust deed actually works much better compared to filing for bankruptcy. You will only qualify if you can afford to repay everything you owe. Remember, you must commit to regular monthly payments until the repayment period ends. You must be a Scottish resident to apply for a trust deed and your details will be publicized in the Register of Insolvencies.