Monday, 19 December 2011

Trust Deed Scotland or Sequestration?

Should i enter a trust deed or opt for sequestration?

For people who find themselves with acute financial difficulties and mounting debt problems often the solutions available can be daunting. Dependant on the severity of the problem this may result in sequestration (Scotland) or bankruptcy (rest of the UK), this solution is the most extreme and damaging to an individual who selects this route. In this solution your details with be published in a national paper and your information regarding the sequestration can be found with relative ease on the internet. Any assets you have will most probably be sold in order to realise money to pay towards your debts. This is often a most traumatic experience for a person going through this solution and should only be taken when no other option is suitable. This solution would also force through the sale of your property if you own one and if it had equity within the property, again an unpleasant and traumatic experience to be avoided. This solution also has the most damaging impact of all to your credit rating and will take many years to fully recover. This is because you have defaulted on your loans and been unable to make an acceptable monthly payment to your creditors over a period of time as would be the case within a protected trust deed. As with any debt solution qualified professional advice should always be taken before entering a solution and this is certainly the case with sequestration/bankruptcy. There are also limitations as to positions and jobs you can hold for instance you are not permitted to be a company director whilst you are bankrupt.

Scottish Trust Deed

A Scottish trust deed is another debt solution for people living in Scotland which may be a much better solution. A trust deed or “protected” trust deed lasts for three years and within this time you will contribute as much as you can afford towards your debts. Any outstanding monies due to creditors after the three year period will then be written off and you are free of debt and worry. In order to qualify for a trust deed you must have £10,000 worth of debt and be able to contribute approximately £150 per month. In order to proceed with a trust deed you will require the services of an insolvency practitioner who will complete an income and expenditure in order to identify what assets exist and how much a person can afford to contribute towards their debts.

Having completed this exercise the IP would arrange a meeting of your creditors and assuming they accept the proposal your trust deed would become “protected” after 5 weeks. Your IP would be responsible for your financial conduct over the period of your trust deed and takes the title of trustee. Your trustee would carry out regular income and expenditures to ensure you are contributing the appropriate amount to your debts. This means if your financial position changes you may pay more or less towards your agreement.

Your trustee is also responsible for the conduct of your creditors throughout the term of the trust deed. This means if any creditor continues to harass you during this period you should advise your trustee who will ensure this stops immediately as this is illegal.

Negatives of a Trust Deed

There are negatives behind this solution however as during the term of the protected trust deed you are not permitted to take out further credit .Your credit file will also be damaged for a total of 6 years approximately meaning being accepted for credit or a mortgage during this period would be extremely difficult.

However to regain control of your finances, be able to answer the telephone and finally get a good night’s sleep once again many people find the positives far outweigh the negatives.

Thursday, 15 December 2011

Debt Management Vs Trust Deed

There are many different reasons people consider opting for a Scottish trust deed. Many are keen to avoid sequestration or stop spiralling interest and charges or continued harassment from creditors. Another reason many people consider entering a trust deed is to write off their debt once and for all.

Why choose a trust deed to write off debt when you can do the same thing through sequestration? The simple answer is both routes will indeed do this, however sequestration has a more negative impact in the long term in relation to your credit history.

Dealing with creditors and debt collecting agencies can to put it mildly be an extremely unpleasant experience and most probably one you are unlikely to forget.
A trustee is required to act on your behalf in order to proceed with a Scottish trust deed, who will negotiate on your behalf with your creditors to secure an arrangement affordable to you in order to clear as much of your debt as you can afford over a period of approximately 3 years.

You may have considered exploring using a debt management as a good solution to clearing your debt however ,this solution can run for 10,12,or sometimes 15 years dependant on the amount of debt you have and how much you can afford to contribute each month. A trust deed will only last for 3 years on average with any outstanding monies due to creditors being written off at the end of that period.

There is also no guarantee within a debt management plan your creditors will stick to your proposal as there is no legal obligation to do so. Equally they are under no obligation to freeze interest and charges as they are in a protected trust deed.
Scottish Trust Deeds offer greater flexible to write off debt and there different ways you can hold some assets. If you have equity in your property you may have to release it dependant on how much you have, however after your trust deed has finished, you will write off any debt remaining on your accounts ,at that point you will then be debt free. Your creditors have no legal right to approach you and cannot come back to take anything from you in the future.

Whilst entering a Scottish trust deed should not be taken lightly, for many it is the correct solution and an excellent way to regain control over your financial position. And best of all after 3 years you are debt free and ready to move your life on free of the burden of worry.

"I'll have one Trust Deed please"

How do i go about entering a trust deed?

If your financial position has reached a point where managing your debt level and creditors yourself has became impossible you may have decided enough is enough. It is important to know there are solutions available to help you.

One solution many people explore is a trust deed, also known as a protected trust deed. The difference between the two is subtle but has an important difference. The key difference between the two is a trust deed does not legally enforce the arrangement on your creditors, put simply this means they can continue to press for payment, add charges and continue to call and write to you. This is far from ideal and serious consideration should be taken before agreeing to enter such a solution. A protected trust deed is different, within this arrangement there is a legally binding agreement between you and most importantly your creditors. This means once a trust deed has become “protected” all interest and charges must be frozen and in addition all contact from your creditors to you directly must cease ,whether that be via numerous telephone calls or a stream of demands coming through your letter box on a daily basis.

In order to enter a protected trust deed you must 1st seek independent advice from a reputable debt advice organisation, there are many not for profit organisations who will offer you excellent impartial advice free of charge. Should you decide to proceed with a trust deed you will require an insolvency practitioner to act on your behalf? Your IP will complete a full income and expenditure in order to fully understand your exact financial position .This will also tell the IP how much you can afford to pay towards your debts .Once this work has been carried out your IP will prepare a case explaining your financial position to your creditors. An offer will be made to them which will be the sum of money your IP has identified as being the amount you can reasonably contribute towards your debts on a monthly basis.

An advert will be lodged in the Edinburgh Gazette advising creditors you plan to enter a protected trust deed and if there are no objections within 5 weeks your case automatically adopts the status of “protected”.

Typically a protected trust deed will last for 3 years and during this period you will be expected to make one monthly payment to your IP,who now becomes known as your trustee, it is the responsibility of your trustee to distribute your payment proportionately and regularly to your creditors. Part of your trustees role is to ensure you pay as much as you can afford towards your debt and to that end your trustee will expect you to co operate fully and disclose any changes of circumstances that will affect the contribution you are making towards your debts .A failure to disclose relevant information can have serious legal implications. Your trustee is also liable however to ensure creditors cease all harassment and if contact has been made then you should advise your trustee immediately who will ensure this stops.

After you have complete your protected trust deed all outstanding debts are written off and you are free of any liability to move your life on free of worry and debt.

Wednesday, 14 December 2011

Trust deed: The pros and cons explained

Trust deed, the pros and cons explained

With no apparent end in sight to the continued downturn in employment coupled with pay freezes and rising bills it goes some way to explaining why more people than ever are exploring solutions to help them get out of debt. One of the solutions available to people who live in Scotland is called a trust deed.

A trust deed is only available to people that live in Scotland and was created by Scottish law in order to help people with serious debt problems .It is not as serious or damaging as sequestration which is the Scottish equivalent to bankruptcy as under a protected trust deed you can be a company director, hold a public office position or become self employed. This is not the case with sequestration or bankruptcy.
Trust deeds are excellent in certain circumstances for people who for a variety of reasons find they are over exposed to debt and struggling to honour the repayment terms to their creditors. This may be down to you or a family member having a pay cut or a loss of job, possibly even a period of illness.

All unsecured loans e.g. credit card ,store card, bank loans, overdraughts and many more can be included within a protected trust deed .Another excellent reason to consider this solution is that all interest and charges become frozen once your trust deed becomes protected meaning your debt stops increasing.

How a Trust Deed works

A trust deed works by bringing all your debts together and, after insolvency practitioner has completed an income and expenditure identify what is an affordable sum for you to pay on a monthly basis towards your debts.

It is the job of the insolvency practitioner to approach your creditors with the proposal on your behalf explaining your financial position and how much you can reasonably pay towards your debts. The IP is also known as your trustee and if the creditors accept the proposal the trustee will be responsible for ensuring you contribute as much as possible towards your debts. The trustee will monitor your income and expenditure throughout the period of the trust deed . The trust deed becomes “protected”5 weeks after the case is published in the Edinburgh Gazette as long as there are no objections or as long as they are less than one third in value or a majority in number.

Once the trust deed has become protected all communication/harassment from creditors has to stop which for most people is a blessing in itself. If any creditor continues to harass you then you should contact your trustee and he will ensure this practice stops immediately.

Negatives of a Trust Deed

The negatives are that you are not allowed to get further credit while you are in your protected trust deed and your credit file will have defaults attached for a period of 6 years .This will make attaining lines of credit difficult even after you complete the trust deed however once 6 years has passed this situation should ease . Your credit rating will be severely affected through the process.

Many people find the weight off their shoulders allows them to sleep better at night again and to be able to pick up the phone without fear far outweighs the negatives behind this solution in addition to the fact they know exactly when they will have completed the solution and start to re build their credit file once again.

Tuesday, 13 December 2011

What is a Scottish Protected Trust Deed

What is a Scottish Protected Trust Deed

A protected trust deed is a debt solution available to people living in Scotland which allows people to avoid the more serious solution of bankruptcy or as it is called in Scotland sequestration.

There are clear similarities between a trust deed and an individual Voluntary Arrangement (IVA). Within these solutions you pay as much as you can back to your creditors over a set period of time, at the end of this period any outstanding sums due to your creditors are written off. The typical term of each solution is 3 years for a protected trust deed and 5 years for an IVA.

In order for a trust deed to become protected either a third in value or a majority in number must agree to the terms of proposal .The actual proposal is put to your creditors on your behalf by an appointed insolvency practitioner , also called an IP or trustee. Your Trustee must place a notice in the Edinburgh Gazette in order that no creditor can come back at a future date objecting to the petition. All creditors must be informed of your intentions and sent a copy of the Edinburgh Gazette.

Your creditors thereafter have 5 weeks to object to your petition before it becomes protected as long as fewer than those with a third of the value of debt object or fewer than a third in number raise objections.

A protected trust deed is designed to help people avoid bankruptcy however it is a serious debt solution and should only be used as a means of avoiding bankruptcy. Your credit rating will be affected and obtaining credit will be extremely difficult for a period of 6 years in addition to this you are not permitted to take out credit through the duration of your protected trust deed.

There are however many benefits over the most acute of solutions (bankruptcy) namely you will be able to work in a self employed capacity or remain so if you currently are self employed. You will also be able to retain or become a company director through this solution as well as holding public office should you choose. And finally any outstanding amounts due to your creditors after you have completed the solution will be written off.

As with any debt solution you should always seek independent and impartial advice in order to allow you to make an informed decision that is best for you. There are several not for profit charities who can offer excellent advice on all debt solutions available who will not charge you for the advice you receive.

Scotland Trust Deed England IVA

Should you find yourself with serious debt problems the options can appear daunting as you try to find the best solution for your circumstances. In the most acute of financial positions this solution may be bankruptcy or sequestration as it is called in Scotland. This is the most severe of solutions and one that should not be entered into lightly as any assets you have accumulated over time may be sold and any monies accrued paid out to your creditors. Another solution may people opt for is a trust deed or protected trust deed. This solution is available to people living in Scotland. In England, Wales and Northern Ireland they have a different solution called an Individual Voluntary Arrangement scheme or IVA.

The principal of both schemes are the same, they are designed to give people who, for a variety of different reasons the opportunity to regain control of their finances and after a period of time approximately (3 years in a protected trust deed and 5 years in an IVA) put the financial trouble behind them.

As a trust deed is a legally binding agreement between you and your creditors you must seek appropriate advice from a qualified debt advisor who will discuss the pros and cons in relation to the solution. Should this option be best for you and should you wish to proceed you would be appointed an insolvency practitioner . The role of the (IP) is to manager your case in order for you to enter the trust deed and thereafter through the duration of your protected trust deed.

It is the responsibility of the IP to complete an income and expenditure with you. Having done this the IP will identify how much you can reasonably afford to contribute towards your debts whilst ensuring you have sufficient left to lead a basic life for the duration of the solution.

The IP will then create a report and arrange a meeting with your creditors in order to seek their approval to the proposal. Assuming your creditors agree to the terms of the arrangement them after a period of approximately 5 weeks your trust deed takes the status of “protected”.

Once your trust deed has been protected your creditors are bound by the terms of the trust deed, this means they can no longer contact you directly either by harassing phone calls or by letters. Equally you are bound by the terms of the agreement meaning you must make a monthly payment to your IP, they will then distribute money to your creditors on your behalf.

After you have ended the solution any outstanding money due to your creditors is written of and you are free to rebuild your credit rating however you should note that your credit file will reflect you entered a trust deed for a further 3 years before it is removed.

Truth about Trust Deed

It is important that you understand exactly what a Scottish Trust Deed is when trying to understand what can go wrong. Ignore adverts telling you how easy it is as they can be misguiding.

What is a Trust Deed?

A Trust deed is one form of insolvency, similar but not as severe as bankruptcy (sequestration). It is a big step to take and you should consider it carefully. It may not be ideal for you or it may be exactly right for your circumstances. It should always be treated seriously when you have no other route to repay your debt.
Some “trust deed advisors” have a financial interest in the trust deed going ahead so we always advise going with a charity. They will give the best advice to suit your own personnel needs and not tell you what you want to hear (they must tell you what you need to hear) do not be rushed into signing.

When talking to the debt advisor make sure he explains the “trust deed” correctly some claim they are experts when this is not always the case. Debt advisors at present do not have to hold a professional qualification. Again I express to keep with a charity as you do not want pushy sales people sending you down the wrong path.
The worst problem about getting poor advice is failure to inform the clients of the pit falls. The facts are if you have equity in your home or a car as well as your monthly payments you will need to pay over the value of these assets or they could be sold.

However if you are the owner of a car or a house this does not mean you should not sign a Scottish trust deed. It just means you should understand the full implications in advance; you need to know exactly what it will mean to you in advance. If you do not understand or will be unable to pay do not sign.

You also need to know what will happen if things get any worse or better. If you receive more income you will have to pay some or all of that into your Trust deed. If you win the lottery or inherit you will be required to pay this into your trust deed. If your income reduces or your outgoings go up there is a possibilities they will accept reduced payments, or extended the trust deed.

The best advice when entering a trust deed is to make sure you know all the pros and cons receive knowledgeable advice before signing. Take advice from a registered charity.

Protected Trust Deed Question

If i enter a protected trust deed what happens to my home?

Many people who find themselves in financial difficulties are attracted to a debt solution call a trust deed or protected trust deed .The two solutions are very similar however a trust deed takes on a “protected” status once your creditors have agreed to the solution. The proposal to your creditors is put forward by your insolvency practitioner (IP).

However a Trust Deed is not suitable for everyone. For instance if own your own property and equity has been identified relating to the house the IP has a duty to find a way to release the equity .The reason for this is due to the fact it is an asset and as such can be used to pay money back to your creditors. If however there is negative or very little equity your property will not be at risk and your trustee can allow future equity to be ring fenced. This means the value of the property is set at the point in time you enter the protected trust deed and not at the end. There is generally a fee applied by the IP in order to waiver any future interest in the property however, this route will give you peace of mind that your home will be safe throughout the duration of your solution.

Typically a protected trust deed will last for 3 yrs. You are restricted from taking out further credit during this period and your credit file will reflect the fact you have defaulted on loans/credit cards etc. It also takes approximately 6 years in total before all traces of you entering the solution have been removed from your credit file. During this period you will most likely find obtaining credit is harder usual, however after 6 years you should find this problem eases off.

After you have completed your protected trust deed any remaining sums of money due to your creditors will be written off .This is their part of the agreement and allows you to move forward free of debt from that date onwards.

For peace of mind and to make sleepless nights a thing of the past entering a protected trust deed is an excellent route out of financial difficulties for many people.

Debt Solution: Trust Deed

Debt Solution Scotland

There is a vast amount of people who have found themselves trapped by debt. For a variety of reasons people who have never lost control of their finances nor consider themselves reckless find themselves unable to meet their obligations on a monthly basis. Often this is due to short time work, withdrawal of overtime, redundancy, illness the list is endless.

Whatever the reason the impact on people’s social life, family and relationships tend to suffer as a result of financial pressures. It is often at this point at people start to look at what solutions are available to them in order to regain control of their lives.

Protected Trust Deed

One solution which may be appropriate is called a Trust Deed or a protected trust deed. This solution is available to people living in Scotland and whilst it is a legally binding arrangement and therefore a formal and serious solution is not as extreme as entering bankruptcy or sequestration as it is called in Scotland.

Should a Trust Deed be appropriate for your financial circumstances you have the benefit of knowing how long you will be in the solution for and more importantly when you will have completed the solution .The solution typically lasts for 3 years and thereafter you are debt free meaning you can start to rebuild your credit rating and after a further 3 years all history of you having entered a solution will have been removed from your credit file.

A Trust Deed is not suitable for everyone and you should seek advice before considering this as your best option.

How does it work?

All of your debts all totalled and after an insolvency practitioner has identified how much you can afford to pay to your debts on a monthly basis the IP will then take your payment and proportionately distribute the money to your creditors. This solution lasts for 3 years and any outstanding debt after this period is written off leaving you debt free.

What are the negatives?

Your credit rating will be affected by defaults marked on your file; this will last for approximately 6 years in total. You cannot take out further credit during the period of your protected trust deed .It is possible for people to discover you have entered a trust deed although this is unlikely and should you have assets you may well be asked to realise any values to pay towards your debts.

What are the positives?

You will know exactly when your arrangement will finish and you become debt free. Any outstanding money due to your creditors after you have ended the solution will be written off. You can finally answer the door/phone again and best of all you can sleep at night.

Monday, 12 December 2011

Effective Way To Get Debt Help

For people living in Scotland there is a debt solution available to them called a Trust Deed. This is the Scottish equivalent of an Individual Voluntary Arrangement (IVA) It is typically used where you have debts over £10,000.A Trust Deed is regulated by The Bankruptcy (Scotland) Act 1985.

A Trust Deed has the benefit of helping the person using this solution to pay off their debts at an affordable level over a period of typically 3yrs. A trustee is appointed to look after both the person in the trust deed and also the creditors.
An insolvency practitioner (IP) would carry out a complete income and expenditure to establish a true and accurate statement of affairs .This is done in order to calculate what can reasonably be paid towards the debts. The Trust Deed is thereafter presented by the IP to the creditors for their approval.

Two thirds of the creditors must agree to the Trust Deed for it to be accepted and become legally binding. A protected Trust Deed ensures that creditors must stop all interest and charges as well as telephone calls and letters etc and best of all they cannot enforce their debt further.

What is the Benefits of a Trust Deed

When the Trust Deed has been approved it means that all interest payments and charges become frozen relating to your unsecured debts and no other fees can be added by your creditors. This helps to ensure your debts are kept to a minimum for the duration of the Trust Deed.

The duration of a Trust Deed is usually completed in 3 years after which all outstanding debt would be written off. Many people during this period take time to reflect on why their finances became so unmanageable in order to ensure they avoid making the same errors again once they have completed the protected trust deed.
One major benefit with a Trust Deed is that (unlike bankruptcy) it is not made public therefore you can keep this information private and no one will know you have entered the solution, which on some lines of employment will ensure you keep your job. Some employers are less than sympathetic to your debt problems.

Another benefit to remember when entering a Trust Deed is that your Insolvency Practitioner deals with the whole process on your behalf. They will deal with all correspondence with creditors, thus removing a lot of stress associated with resolving your financial problems.

Once the Trust Deed has been approved and all arrangements are in place you will only make one single monthly payment towards your debt.

A Trust Deed can be an effective way to resolve serious debt problems, however you should always seek advice from a free debt counselling service to receive all information you require to make an informed decision .

Trust Deed Debt Option

Trust Deed Debt Option

Throughout Scotland the financial cost of living is taking its toll on many families. The ever increasing household bills and stagnant wages means that many families are falling into financial difficulty.

Help is available to help people repay their debts with Government legislation this comes in the form of Trust deed, Debt Arrangement Schemes and Sequestration. For many people they believe there problems are so bad that they are left with little choice but to move abroad, start afresh and walk away from their debt.

For many the pressure of being in debt can be too much to bare it affects everyone differently for some the only way out that they can see is to elope this is something they would not normally contemplate but they feel they have little choice. This will cross more people’s minds than you think.

Running Away Is Not The Answer

Running away or eloping is not a solution that any reputable debt advice company would recommend.

In days gone by it was known as a ‘Midnight flit’ and this name came from families leaving there homes in the dead of the night to avoid paying their creditor (landlords or anyone chasing them for money).

If you pay nothing to your debt for 6 years and your creditors cannot get hold of you within this time it will eventually become ‘Statue Barred’ and if the creditors manage after this to get hold of you they can make no attempt to contact you because after 6 years it is seen as harassment.

The down side is this will be marked on your credit file and should you return to the UK this will have an impact on you should you seek credit.
The other things to consider.

• Where would you live and work?
• Would you be able to communicate?

Also remember creditors will go to any length to find you. They will pull out every trick in the book. They may contact family members they will check all addresses they will check goggle can you live with this pressure?

They may also trace you abroad though they will be unable to pursue you for the debt it will be a constant reminder of what you have left behind.

If you live in Scotland the best thing you can do is contact Debt Support Trust they will help you resolve the Debt this advice is all free.

Running away from debt is not something anyone should do if it is a dream keep it as that.

Trust Deed Scotland Advice

Trust Deed Scotland

Trust deed is a solution for debt though it is available only to people residing in Scotland. It is a solution to people who can repay some but not all off their debt and it is not as damaging as bankruptcy which is still suitable for some who can no longer pay back debt without continuing to pay back more.

The words used to describe it are “Scottish trust deed” or a “protected trust deed”.
Before signing a person is promising to pay what they can reasonably afford towards their debt on a monthly basis. This amount will be agreed between both parties. Also people with assets (Commonly equity in property) will need to contribute the asset value in to the trust deed in lieu of the asset value.

They usually continue for three years, and by the end of the term all funds will have gathered in the trust deed. The funds that have gathered will first pay the fees of the trust deed and then each creditor will receive a dividend. If any creditors do not receive a dividend the debt must be written off legally and the creditors can no longer collect them.

For a lot of people in Scotland there disposable income is getting smaller quickly. The price of living has rised dramatically with the price increases in food, gas, electricity and fuel all on the increase. With many wages been frozen and job being lost the pressure to pay debt has never been so high but with money simply not there it is becoming harder and harder to pay the creditors.

With mortgage rates at an all time low this does help however this only leads us in to a false sense of security for when they do rise 8 million people will be affected. Putting even more pressure on the household budget.
If there is no money left to pay the creditors we are in danger of a "debt spiral". The only way to explain this is using creditors to pay creditors. If this did happen the level of debt will increase rapidly.

A trust deed can stop this "debt spiral". The payment into a trust deed depends on an individual’s personal finances and after doing an income and expenditure and taking of priority debt and living cost. Also making sure they have a realistic amount to live day to day without any further borrowing.

The golden rule is to seek help as soon as there is a problem always use a charity the sooner you seek help the more options will be available. For some a Trust deed will be the perfect solution it will not suit everyone so seek advice as soon as you foresee problems .

Thursday, 8 December 2011

Reduce Bills With Comparison Site

One of the best methods to resolving a debt problem is to make sure you are not overspending or missing out on savings. It has never been easier to compare the price of any product or service before making your purchase, with all the new comparison tools at our disposal.

Recently people found a way to make money from comparing the price of their shopping after Tesco offered to give people "double the difference" on any product which was cheaper elsewhere. Tesco were forced to pay out hundreds of pounds in some cases because people were able to compare store prices so easily.

It is even possible to compare prices on the go with different mobile phone apps which mean you don't need to compare prices online before you go to the shops.

UK Debt Helper has found a really good price comparison website which is easy to use and very friendly. Select  Money Tree will help you compare investment, insurance or even just a daily shop. You can also enter your details and find a range of ways which you can reduce your bill.

Tuesday, 13 September 2011

"Can I enter a Trust Deed"?

The Protected Trust Deed is only available to people living in Scotland with serious debts. 

What is a Trust Deed?

A Trust Deed is a legally binding arrangement between someone in debt and their creditors. A licenced insolvency practitioner is required to administer the solution. The Trust Deed is legally binding which means, if accepted, both you and your creditors would have to adhere to the terms of the Trust Deed for the full period (usually 36 months). The Protected Trust Deed is an insolvency solution for people who cannot afford to pay their contractual obligations to their debt as they fall due.

The process to enter a Protected Trust Deed is as follows
  1. Contact a debt advice charity to ensure a Protected Trust Deed is the right advice. 
  2. If it is you would need a licenced Insolvency Practitoner to adminster your case (there are a number of insolvency practitioners in Scotland)
  3. The insolvency practitioner would create a proposal and send it out to all of your creditors. The proposal would include how much you propose to repay and over what period of time
  4. A notice is placed in the Edinburgh Gazette about your Trust Deed
  5. After 5 weeks, if less than a 1/3 in value or a majority in number DON'T object to the Trust Deed it will have gained Protection.
  6. The insolvency company will then register your Protected Trust Deed with the Accountant In Bankruptcy.
Each year your insolvency company will review your Protected Trust Deed to ensure the payments are still manageable. The Protected Trust Deed is flexible so your payments can increase as well as decline depending on your available income.

You cannot enter a joint Protected Trust Deed as the debt solution is individual. This means a husband and wife would need to enter individual Protected Trust Deed's. The insolvency company may decide to enter one Edinburgh Gazette advert as this would save money on the case.

General criteria to enter a Trust Deed?
  • Must owe at least £10,000 of unsecured debt
  • Must be able to repay at least 10% of the unsecured debt over 3 years (excluding the insolvency practitioner fees - ranging from £2,000 to £6,000).
  • If your equity from an asset (house, car etc) plus 36 monthly payments is more than your total debt then a Protected Trust Deed would not be the best debt solution.
  • You must have at least 2 different creditors. 
Positives of the Trust Deed?

There are positives and negatives to entering a Protected Trust Deed and you should always seek professional advice prior to entering any debt solution.  
  • Benefit 1: You can make affordable repayments towards your debts instead of trying to rob Peter to pay Paul.
  • Benefit 2: You will write off some of your debt (typically 50%).
  • Benefit 3: You can be sure of when the Protected Trust Deed will end (usually 3 years but your insolvency practitioner would inform you of this).
  • Benefit 4: A Protected Trust Deed is a formal agreement for both you and your creditors which must be adhered to.
  • Benefit 5: The Insolvency company will manage all creditor correspondence on your behalf.
  • Benefit 6: Once your Protected Trust Deed has been agreed with your creditors they cannot change their mind at a later date, giving your security and protection.
Negatives of the Trust Deed?

The negatives of the Trust Deed should be considered extremely cautiously before proceeding. These include;
  • Negative 1: It's legally binding so you will have to continue to make payments to your Protected Trust Deed, even if you don't want to continue.
  • Negative 2: If you decide to stop paying your Trust Deed your Insolvency Practitioner would have a legal obligation to proceed with Bankruptcy.
  • Negative 3: You can only include unsecured debts in your Protected Trust Deed - any others, such as your mortgage cannot be concluded. If you fail to maintain payments to secured debts then the items can be repossessed.
  • Negative 4: A default will be added to your credit file and will last for 6 years. 
  • Negative 5: Your house / flat is typically secure, however any equity would need to be released to enter into the Trust Deed. 
  • Negative 6: You cannot obtain further credit whilst in your Protected Trust Deed.
Trust Deed Case Study

Steven (29) and Dawn (31) from Dundee have two children and entered into a Protected Trust Deed. They didn't have a car and they lived in a housing association. Their debt was £15,000 each and they planned to pay £170 each.

Evan (43) from Glasgow entered a Protected Trust Deed with £42,000 debt and a disposable income of £350. Evan also had equity in his property of £7,000 which he had to release via remortgage. In 3 years Evan will be debt free and discharged from his Protected Trust Deed.

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Top Trust Deed Areas
  • Glasgow
  • Edinburgh
  • Dundee
  • Falkirk
  • Inverkeithing
  • Stirling
  • Aberdeen
  • Kelso

Thursday, 8 September 2011

Equity Release: Debt Solution

A debt charity has warned that over 55's are increasingly turning to equity release schemes in a bid to repay their credit card, personal loans and other debts which are unsecured. The CCCS found the average debt to be just under £23,000.

As personal budgets are squeezed ever tighter the outcome for consumers is bleak. Rising costs of electricity, gas, fuel and as expected an interest rate rise, are likely create a devastating strain on UK consumers.

The equity release scheme is one option to gain access to the capital tied up in an asset, such as a house. This option enables the person in debt to use the cash now and repay it within their mortgage. One benefit of the equity release scheme

Problems with Equity Release

There are problems with equity release, especially for people nearing retirement, as they will have a larger mortgage to repay and fewer working years to be able to manage the repayments. In the end, it could mean downsizing and selling the property with the potential future outcome of renting.

Also, whilst the equity release service from the CCCS is free to use, it requires a mortgage lender willing to provide the capital. The unsteady market conditions means releasing equity is very difficult, especially for people with defaults or arrears.

Be aware, with equity release schemes you are changing one debt which is unsecured (credit card, store cards, personal loans etc) for other secured debt (on your mortgage). You are not clearing the debt, just including it within your mortgage.

Full Debt Advice

It's essential people get full and honest debt advice before they take action and decide to release equity from their house. Planning for the future is essential. For example, somebody with a debt of £22,000 and a disposable income each month of £300 could be debt free in just over 6 years (if interest and charges were frozen, oh, and if they don't use a fee-charging debt management company!!). The decision is ultimately the consumers, but they could choose a debt management plan or an equity release option to resolve their debt problems.

Friday, 19 August 2011

Pensioners Struggle to Survive & Face Bankruptcy!

A report released today explains that pensioners are £280 worse off over the fully year compared to last year. Rising cost of living, low interest rates and Government cuts mean pensioners are facing a tough time financially. Experts warn the situation is likely to get worse.

The average pensioner has savings of just under £20,000 however as interest rates remain low their assets are not producing what they would have expected to help them in their twilight years.

As the cost of living increases and Government subsidies become tighter, the elderly are having to rely more on their savings. This has a detrimental impact on the quality of their living.

The number of pensioners going bankrupt has increase three fold over the past 10 years - this means they can expect a life living on state benefits and could potentially lose their property.

The severity of the problem continues to grow, lets hope the Government step in soon to support those most in need of financial support.

A spokesman for UK Debt Helper said;
Pensioners deserve our support and care and reducing the benefits they receive in heating allowance shows a grave problem with our country. Austerity measures are required to resolve the countries growing debt problem but surely it hasn't come to this, and if it has, why?

50% of Individuals Worry about Debts

More than 50% of individuals are concerned about their debts according to leading trade body R3.

The latest results, from the insolvency trade body R3’s Personal Debt Snapshots, reveal a 7 per cent rise in debt concern compared to the same time a year ago, according to the quarterly tracker.

Frances Coulson, R3 President said: “Households that are already struggling may find traditional lenders unwilling to provide further credit and are therefore drawn to short-term credit solutions. Individuals turning to short-term loans and credit cards should be wary of the high interest rates that often accompany these products. Overall debt can quickly snowball out of control.”
Credit card debt worries have increased by 5 per cent on the last quarter, whilst payday and short term loan worries have risen by 2 per cent, hire purchase concerns by 3 per cent and store card worries by 1 per cent.
Despite this, fears over secured lending have fallen. Mortgage repayment concerns are down by 4 per cent and bank loan doubts have decreased by 2 per cent. 

Frances Coulson commented on the trend: “Concern about secured lending is also likely to have fallen due to the Bank of England continuing to keep interest rates at an historic low. Households have begun to feel comfortable that their mortgage repayments will remain as they are for the foreseeable future.”

13 million individuals are saving less than they used to and one in five consumers are putting off big financial decisions.

 “Early 2011 was a tough period as individuals struggle to keep control of their finances and felt uncertain about the future. It is encouraging to see people have started to bolster their savings and pay off their debts. But we must remember that financial distress is still higher than it was a year ago.
“Delays in taking big financial decisions are up considerably on last year, indicating that the public is still hesitant about what the coming months have in store,” Frances Coulson said.

“With around six million people employed in the public sector in the UK, significant redundancies could result in increased insolvency levels. More people have started saving and paying off their debts, so these reserves should serve them well if they do face a period of unemployment. Those struggling with debt should seek financial advice rather than dealing with the distress on their own,” she added.

Family and friends help with Debts?

In times of trouble many people rely on their friends and family for support. We'll ask our family and friends for a variety of support but people often state they can't talk to them about their financial problems.

Friends and family lend a supportive ear when times get tough and whilst some may be judgemental at first, they will undoubtedly help you find an appropriate charity to help.

Our Research

We've asked 157 people who were in debt and less than 16% told their friends and family about their financial problems. This can result in people feeling alone, becoming depressed and suffering from mental problems.

Why you should speak to your friends and family about your debt problems?
  1. "A problem shared is a problem halved"
  2. Your friend / family may have been in the same situation themselves
  3. Your friend / family can provide emotional support
  4. Your friend / family can support you to find a debt charity to help you
  5. Your friend / famly could offer short term support, either financially or by communicating with your creditors?
Have you told your friends and family about a debt problem? Please share your experience with us.

Avoid Mobile Roaming Charges

Mobile Phone Debts

The mobile phone was once considered a revolutionary product, only for the rich and people within the business world. Today, it's a communication tool to stay in contact with other people but importantly we all have them! The problem with the mobile phone is it can get us all into debt.

The mobile phone typically charges us 12p for a text message however when we phone other mobiles the cost can be up to 40p per minute - an hour call would cost £24! The home phone / landline cost would be far less expensive. The cost of using a mobile phone can soon sky rocket if you're not careful.

Also, watch out for roaming charges - these have been know to run into the thousands of pounds of debt. Roaming charges are when your phone cannot connect to the internet from your usual provider. The back up roaming company will charge you roguhly £3 per megabyte you download but check the small print on this. Every web page you look at will automatically download images and content which will then charge you! Usually people try and use their internet on their phone overseas and this is how charges are incurred.

"A good tip is to check if there is available WiFi nearby as this won't incur roaming charges"

You can avoid roaming charges by checking your setting and switching the roaming off.

New EU Regulations

The European Union has started to implement new regulations which will take effect from 2012 which will limit the roam charges you could face. A company will not be able to charge you more than 81p per megabyte from 2012. By 2014 that should have been reduced to around 40p. It would found in a recent survey that the average phone bill for people returning from holiday was £149.

Tips to avoid high mobile phone debts
  1. Only use your mobile when you are out of the house - if you have the house phone then use that instead (unless you are on a contract phone and have free minutes).
  2. Monitor your free minutes carefully! Most people get into debt because they haven't checked how many available minutes they have and they've exceeded the level.
  3. Turn off data roaming (it'll be in your hand book)
  4. Budget for your phone and stick to it
  5. WiFi is usually free - look for the WiFi sign!

Thursday, 18 August 2011

Debt Management Plan UK Questions and Answers

Debt Management Plans: Questions And Answers

A debt management is an informal debt solution which should be considered carefully before entering the solution. It will have a negative impact on a persons credit file. The solution can enable you to repay your debt over a longer period of time that originally agreed. You may also be able to freeze interest and charges too!

Here are some commonly asked questions about debt management plans.

Q. Can legal action be taken against me if my creditors are receiving monthly payments?

Ans. Yes, because it is an informal arrangement both you and your creditors can cancel the agreement at any time

Q. How will a Debt Management Plan change my credit file?

Ans. Because your creditors will place a default on your credit file which will last for 6 years. It's not guaranteed they will do this but more than likely. This is because you are not repaying them what was originally agreed. Credit reference agencies (Experian, Equifax and Call Credit) will record this default.

Q. Is a Debt Management Plan a loan?

Ans. No, you do not borrow more money in a debt management plan - you use the available disposable income to offer pro-rata payments towards each creditor.

Q. How long does a Debt Management Plan last?

Ans. There is no set time for a Debt Management Plan to last. You must repay all of the debt you owe. If your debt management plan will last longer than 10 years then another debt solution may be more suitable.

Q. Will interest and charges be frozen?

Ans. There is no guarantee interest and charges will be frozen but a debt management company will ask for this.

Q. Will they take my house in a Debt Management Plan?

Ans. No, they will not ask you to offer your house in a Debt Management Plan. You must keep up secured loan repayment though to ensure you maintain your mortgage and retain the property.

Q. I have a CCJ, can I enter a Debt Management Plan?

Ans. Yes, there are no problems entering a Debt Management Plan with a CCJ

Q. Can secured loan debts be included?

Ans. No, you must always maintain your secured loan payments. If you are in arrears with your mortgage this cannot be included.

Q. How much do companies charge to set up a Debt Management Plan?

Ans. For profit Debt Management Companies charge the first 2-3 months payments (meaning your account will go into further arrears) and then a monthly management payment of between 12% and 50% of your payments.

A charity will not charge you a set up or monthly management fee. A debt management charity will receive 10% of whatever they collect and return to the creditors out of the end pot of money.

Q. How can you tell if your creditors are being paid?

Ans. A Debt Management company should send you quarterly statements to update you on the progress being made and the money which has been repaid.

Q. Is there a minimum amount I need to pay into a Debt Management Plan?

Ans. The more you repay each month the quicker you will be debt free. The minimum amount a Debt Management company can accept is £100 per month. If you cannot afford this amount then another debt solution may be more suitable.

Q. How will the payments be made?

Ans. You will pay one company (the Debt Management company) your monthly payment and they will distribute this amongst your creditors.

Q. My creditors are still contacting me even though i'm in a Debt Management Plan, what can I do?

Ans. You should speak to your Debt Management company and ask then to act on your behalf and deal with any problems.

Q. What are the benefits of a Debt Management Plan?

Ans. Potentially you can benefit from
  • One monthly fee to one company
  • Reduced interest and charges
  • You don't have to liaise with creditors
  • You will pay back all of your debt
Q. What are the disadvantages of a Debt Management Plan?

Ans. The disadvantages are
  • It's informal so the plan can start and stop at any minute if the creditors change their mind
  • Your Debt Management plan could last for a long time
  • There is no guarantee interest and charges will be frozen
  • It will have a negative impact on your credit file
Q. Who can enter a Debt Management Plan?

Ans. Anyone can enter a Debt Management Plan as long as they have a disposable income and unsecured debt.

Q. How much debt should I have to enter a Debt Management Plan?

Ans. You should not enter a Debt Management Plan if you have less than £5,000 worth of debt.

Q. How many creditors do I need?

Ans. At least 2 or 3 (depends on the company). A Debt Management company will not negotiate with one company for you.

Q. Can Debt Management monthly payments change?

Ans. Yes, the Debt Management company will conduct a 6- monthly review of your income and expenditure. If you have more money which you can repay towards your creditors then you will be asked to make this. If your income drops then your Debt Management plan can continue (as long as you can afford at least £100 per month) with a lower amount.

Q. Are my creditors going to accept my proposal?

Ans. There is never any guarantee your creditors will accept your proposal.

Q. If a creditor refused my proposal what would happen?

Ans. If a creditor refused your debt proposal then the Debt Management plan could continue although you would have to negotiate yourself with the other creditor.

Q. Why would a creditor accept a Debt Management Plan proposal?

Ans. A creditor is likely to accept a Debt Management Plan because it's an agreement for them to get back all of the money they lent you. This means that despite it taking longer than agreed, the creditor will not be out of pocket.

Q. Can I take out more debt?

Ans. Technically you can take out more credit. Most Debt Management companies will remove you from the Debt Management plan if they understand you to be using further credit to supplement your lifestyle.

Q. Can you get a joint Debt Management plan?

Ans. Yes, you can have partners (two people) entering a Debt Management Plan together.

Q. Can you change Debt Management company if you are already in a Debt Management Plan?

Ans. Yes. It's an informal arrangement so you can change your Debt Management company at any time.

Q. Who tells the creditors about the Debt Management Plan?

Ans. The Debt Management company should tell the creditors about the Debt Management Plan.

Q. Who will know about my Debt Management Plan?

Ans. The only people who know about a Debt Management Plan are you, the Debt Management company, your creditors and anybody else you tell. The Debt Management Plan is not registered publicly.

Q. Do I have to tell my wife / husband / partner about my Debt Management Plan?

Ans. No, not if you don't want to.

Q. How much will each of my creditors receive each month?

Ans. Payments made to your creditors are made on a pro-rata basis. This means the creditor owed most will receive the largest amount each month. For instance, if you can afford £150 per month then this will be split accordingly.

                     Total debt    Percentage of debt      Monthly repayment   

Bank              £4,000               66%                         £99

Store card     £1,000                17%                        £25.5

Credit card    £1,000                17%                        £25.5

10 Debt Myths!

There are hundreds of myths about the debt industry - everyone has a mate, family member, work colleague that has a story about debt problems. We've taken some of the worst debt myths in this post... enjoy! Please contribute your own too!

Debt Myth 1 - You can't tell anyone

Often people think they can't tell anyone about their debt problem or it'll result in receiving additional threats and worry more people. Millions of people each year turn to debt advice charities and receive debt advice. There are a number of different debt solutions available including Bankruptcy, IVA, Trust Deed, or Debt Management Plan. 

You are not alone - speak to a debt charity or tell a friend or family member. A problem shared is a problem halved.

Debt Myth 2 - Debt advice companies are all the same

Some debt companies will act within your best interests but most want to make money from your misery. Research and check out your debt company. We advise speaking to a debt charity who can give you informal debt advice
Debt Myth 3 -"Write off your debt"

In some debt solutions you can write off your debt but this will have a negative impact on your credit rating and make obtaining credit again in the future difficult. Rarely can you write off as much as the adverts say - it's typically 50% debt being written off in an IVA or Trust Deed.

Debt Myth 4 - I'll never have a bank account again

Lots of banks are now creating bank accounts for people who have a bad credit history. If you are entering a debt solution ensure you change banks if one of your creditors is the bank you currently bank with. 

Remember, ask for an account without an overdraft!

Debt Myth 5 - Paying fees for Debt Management

You DO NOT HAVE TO PAY FEES FOR A DEBT MANAGEMENT COMPANY! We've bolded it because it's one of the most mis-understood myths about the debt industry. There are fee debt management plans where you don't have to pay for the solution. Instead the creditors pay the debt management company fee so you don't have to. Speak to any debt charity - they'll steer you right!

Debt Myth 6 - Bankruptcy will take my home

Most people are scared their debt will mean they will lose their home. In Bankruptcy (and an IVA) the official receiver / insolvency practitioner is only interested in any equity you have in your assets. This means if your house has no equity or you live in rented accomodation you will not have to leave your house. 

If you earn an income where there is disposable money available to pay towards the Bankruptcy then an Income Payment Order may be in place for a total of 3 years.

Debt Myth 7 -Friends / Family can't buy my assets

Friends and family can purchase your assets as long as they are paying a fair price. It's always best to speak to a licenced insolvency practitioner about this before proceeding (especially in an IVA / Bankruptcy).

Essentially, the official receiver / insolvency practitioner wants the equity that's due so it can come from any party.

Debt Myth 8 -You can go to jail for not paying your debt

This is factually incorrect, you cannot go to jail for not paying your debt. You should repay your debt if you can but if you can't then you won't go to jail.

If a judge orders you to make repayments and you refuse then the judge can place you in jail as punishment however this would be for failing to follow a judges orders.

Debt Myth 9 - Your credit file will be damaged forever

If you enter an insolvency solution your credit file will be damaged with a default being added. This default will last for 6 years, after which period you will be able to gain credit and start to improve your credit rating again.

Debt Myth 10 - Bailiff's / Messenger at arms will enter my house

A bailiff (or in Scotland messenger at arms) are only allowed to enter your property if you invite them in.You should communicate with a bailiff / messenger at arms to come to an agreement regarding your debts, this avoids the problem spiralling out of control.