Introduction to a Protected Trust Deed

http://ukdebthelper.blogspot.com/Introduction to a Trust Deed

Roughly 9,000 enter a Trust Deed in 2010. It's a popular solution for people living in Scotland and in debt. It has a number of benefits including only repaying a percentage of the money you borrowed, with the rest being potentially cleared. There are a number of different debt solutions for people in debt. We're exploring the positives and negatives of the Trust Deed.

Like all debt solutions there are positives and negatives. The Trust Deed is becoming a more popular debt solution, with hundreds of companies looking to offer this debt solution. However the Trust Deed solution comes with a warning and should be considered with great care.

What are the negatives?

With the rise of the Trust Deed debt solution we've seen an increasing number of complaints to the Office of Fair Trading because of unfair practices. This means that people who are not suitable for a Trust Deed are being told it's the right debt solution for them. The money made by companies because of people entering a Trust Deed can be astronomical. This article confirms the truth behind the negatives of the Trust Deed debt solution.

The negatives of a Trust Deed include;

- If you fail to meet your contributions then you would be likely to face Sequestration.
- Your equity within your house must be taken into consideration. Some companies fail to explain that if your equity has not been dealt with by the end of your debt solution then you may have to sell your house.
- Your credit file will have a default on it for 6 years.

When is a Trust Deed right

In many instances the Trust Deed is the right debt solution. When you have severe debt problems and you realistically cannot repay your debts with your available disposable income, then a debt solution is required. If you have equity within your property which could pay your debt in full then you would not be able to enter a protected trust deed.

Who do I speak to

If you have debt problems then you have a choice who you tell. Some people don't even want to tell their closest family. It's essential you get the help you need. We've created some top tips when deciding who to contact for debt help.

1. Never speak to companies who text, email, mail or telephone you. They are the companies most likely to be making the most profit by charging you for simple advice which a free charity could offer.

2. Never feel pressured by a company into signing anything. If they are pressurising you then they are more concerned by the money they can make and will not really care about your financial situation.

3. Check for a consumer credit licence. If the company doesn't have a consumer credit licence then they are breaking the law and not a legitimate debt advice company.

4. Google. Check Google for feedback from other people.
5. Never contact a debt management company. Some for profit companies will only offer one solution- a debt management plan. The debt management plan can be useful for some people, however it is an informal arrangement with your creditors any companies only need a consumer credit licence to administer this solution. If a company only offers a debt management plan and no other solution, then you can quickly find yourself in a long term (40 years) debt management plan.

The options for debt advice

There are a number of options for people in debt and looking for help. Most people recommend speaking to a debt charity because they are not profit focussed. Other people prefer immediate face to face debt advice. In this instance you may need to pay for advice out of your own pocket. Free debt advice can be found at a number of debt charities, with the citizens advice bureau offering face to face charity advice.

Bankruptcy & Debt Relief Order (DRO)

Bankruptcy is the oldest debt solution and is considered the last resort when facing financial worries. In this article we will discuss a case which led to bankruptcy and how it was dealt with.

Miss G has run up debts of over £20,000. She lives with her parents and does not have any assets that she could sell. She has one child and has had her income slashed as she has had to go part time.

After all avenues were explored the solution for Miss G was Bankruptcy. After paying the fee of £450 for the insolvency service for the Official Receiver. As her income decreased she did not have to pay court fee due low wages.

Bankruptcy was then granted. Miss G did not have to pay any money every month as her income is low. Miss G will be discharged from her Bankruptcy after 1 year. Miss G is aware of the impact on her credit file but there was no other solution available to her.

Criteria For Bankruptcy

- You cannot realistically meet any other debt solution
- Your unsecured debt must be above £750 to enter bankruptcy
- You will need to complete forms provided by The Insolvency Service

Benefits Of Bankruptcy

- You will no longer have to deal with your creditors
- Once your bankruptcy is completed you will be able to start again financially without any debt
- You stop making any payments to your creditors

Negatives Of Bankruptcy

-Your credit rating is likely to be severely affected
-You cannot credit of £500 or more without disclosing you are bankrupt
-You cannot be a director of a limited company
-You may lose your home and car
-There has been some new routes to bankruptcy added over the years, these include;

Debt Relief Order(DRO)- This is only available in England, Wales and Northern Ireland but gives people in severe financial trouble the option of declaring themselves bankrupt without the same cost or hassle. The criteria for a debt relief order is;

Not have unsecured debt exceeding £15,000
- Not have any assets exceeding £300
- Not own your property (i.e. Own a home with a mortgage)
- Not have available disposable Income after normal household expenditure exceeding £50
- Be domiciled in England or Wales, or in the last 3 years have been resident or carrying on business in England or Wales
- Not have been subject to a DRO within the last 6 years

Also, you cannot apply for a DRO if you are currently Bankrupt, in an IVA or have a current Bankruptcy Restrictions Order or Undertakings or have current Debt Relief Restrictions or undertakings.

Different Routes Out Of Debt

There are a number of routes a person can take in order to receive the help needed to get out of debt. In this article we will discuss these different options. Debt problems exist across the UK with millions of people in debt and thousands struggling to survive, so what is the best way to help those in need of financial help?

Since the recession began in 2008 we have continued to see an increase in the number of debt advice/management companies throughout the uk. Some of these companies will provide a free service to those in debt and some will charge a fee. Debt support can be provided by telephone based companies and some will be face to face but what is best for those who need debt help.

Citizens Advice Bureau which is a Government funded help service offering face to face help for a range of problems including debt. The charity has seen a rise in cases over the past 2-3 years. The increased demand for help from the Citizens Advice means they are dealing with a new debt enquiry every 6 minutes. Budget cuts along with demand means receiving debt advice can be difficult. A report by The Government Department for Business Innovation and Skills questioned whether a mix of telephone, internet and face to face debt help would be best due to the demand.

Telephone - A friendly option which gives people the chance to receive help quickly and have a solution which is customised to their needs. Certain organisations such as charity debt advice will be free to call and so will not be putting the client into further debt. However by speaking on the telephone it is not as personal as speaking to a person one to one which many people prefer.

Internet - This option is one that is continuing to grow and is a great solution for those who like the anonymity of the web. Advice can be provided without even speaking to anybody however this can be time consuming and difficult to understand for people in debt.

Face to face - This option gives people the chance to speak with someone who can take all the information into account and also give back a quick solution. However, this requires the person in debt to either travel to a meeting point and can therefore cost money. Alternatively the debt advisor will have to travel and to meet the individual which can again be costly.

There are three types of debt support organisations and these are broken into;

Debt Advice Company - When a person pays a company for their advice or for helping to manage their financial needs. This can be seen as a quick route however telephone based charities can offer a similar, impartial service. The debt advice company may favour a particular debt solution as it makes them more money. Also, the debt advice company may charge you for their service.

Government Funded Debt Advice - When the Government funds an organisation to offer debt advice. The best two examples of this would be, National Debt Line and Citizen's Advice Bureau. Any help or advice from these centres are free however may not be as quick an option due to having limited funding.

Creditor Funded Debt Advice - The best example of this is CCCS who are a charity funded by creditors for the work they carry out. This is also free to the person in debt.

There is many options available to people whether it is how they wish to communicate or who they wish to deal with. Speak to several debt advice companies before making a decision. Never pay for debt help and ensure the company you are dealing with has a consumer credit licence.

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