Tuesday, 13 December 2011

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.


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