The Role of Trust Deeds to Help Consumers Manage Their Debt Obligations

Trust deeds are ideal for consumers who cannot pay off their unsecured debt on time. Individuals seeking trust deeds need to be living in Scotland. Nonetheless, consumers residing in England, Northern Ireland, and Wales have access to individual voluntary arrangements. Individual voluntary arrangements have the same objectives as trust deed agreements and yield similar results.

Make Loan Repayments More Affordable

Making debt payments affordable is one of the most incredible benefits of this form of agreement. You agree to remit the required monthly payments for four years by appending your signature on a trust deed. Any outstanding debts after the four years are waived off, and you are released from the loan. You will not be asked to pay anything else. Read more here: How does a trust deed work.

Are Designed For Unsecured Loans Only

Trust deeds are designed for unsecured debt only. The secured debt you may have has a higher priority than unsecured debt; the former is usually paid first from your budget. For example, a mortgage is an example of unsecured debt not captured by trust deed agreements. 

In addition, a trust deed can only be prepared and wholly managed by a reliable insolvency practitioner similar to this insolvency practitioner london you will choose to hire. The practitioner assumes the trustee function and takes care of all correspondence between you and your debtors.

You will be expected to furnish your practitioner with the required details of you and your control of the assets under your name. For this reason, it is best to hire a reliable practitioner with enough professional experience to offer the right services to clients. You will only need to provide your practitioner with details about your financial position, and they will handle the rest of the processes for you.

You Will Continue Owning Your Home

Although mortgages are not part of a trust deed agreement, the equity in your home is factored in when evaluating your financial position. As much as the arrangements consider your mortgage agreement to a certain extent, home owners can continue owning their homes. The same concept applies to personal cars, particularly luxurious ones.

The practitioner’s work is to assess how much you can pay every month to settle the debt. After the trust deed has been well drafted, it is issued to the consumer’s creditors as an official proposal. Everything is set if the practitioner manages to convince 75% of the creditors to consent to the trust deed proposal.

Practitioners will ask for their individual fees, and the expenses will be deducted from your monthly debt payments.

How Trust Deed Safeguards A Consumer

The trust deed will be secure upon successfully completing the required processes. A secured trust deed stops your creditors from confiscating your assets to recover outstanding debt or/and interest. More importantly, the trust deed stops creditors from beginning legal proceedings against you because of the debt.

Nonetheless, you are expected to meet your obligations captured in the trust deed. Please honor the agreement to avoid losing your assets, or creditors may begin repossessing the assets to recover their money.

Impact Of Trust Deed On Monthly Debt Payments

Indeed, the goal of getting into this form of agreement is to get maximum support or debt restructuring to enable you to meet your monthly debt obligations. Therefore, you know you are safe once you get into this agreement. However, the protection will only be recovered when you make the debt payments on time.

Although trust deeds are not suitable for everyone, they are an effective solvency solution for a select number of borrowers in today’s financial economy.

Benefits Of A Trust Deed

There are a number of benefits brought by a trust deed agreement. A trust deed agreement protects a consumer from having to deal directly with creditors. Essentially, the trust deed enables the consumer to take care of their outstanding unsecured debt, making it much easier to handle and pay down the overall debt burden. More crucially, the consumer becomes debt free at the end of the four years, notwithstanding if they have any outstanding debt or not.

Drawbacks Of A Trust Deed

Your practitioner will deposit a copy of your debt repayment arrangement with the Register of Public Insolvencies. In addition, the trust deed agreement will form part of your credit report for six years.

Initially, it is not easy to handle credit issues. However, your main objective for more than half that duration is servicing your debt obligations. It would be best if you were motivated to see yourself debt free in the future.

Sophia Anderson

Sophia Anderson is a blogger and a freelance writer. She is passionate about covering topics on money, business, careers, self-improvement, motivation and others. She believes in the driving force of positive attitude and constant development.