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Could A Trust Deed Solve Your Debt Problem?

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By Author: David Baddeley
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Even those people with jobs are battling to find the spare cash to cope with increasing interest rates on credit card debt and loan debt. That’s why more and more people have turned to a Trust Deed as a practical solution for helping them become debt free.

A Trust Deed is a legal agreement with the power to drastically reduce your debt in a short time-frame. By setting up this form of agreement with your creditors you can pay back only what you can afford and then walk away debt free within a short period of time.

Is it really that simple?
Yes! As long as you make each payment on time and in full over the time-frame agreed in your Trust Deed (usually 36 months) you will have no more debt, no more hassle from your creditors and can begin again with a clean slate.

Will a Trust Deed be right for me?
If you are overwhelmed by too much debt and struggling to make the repayments to your creditors, then this can form of debt help can throw you a much needed life-line. It doesn’t matter how you go to this point - you may have had a change in circumstances, such as a pay cut or redundancy, and had to use credit to pay your bills. Whatever the circumstances, a Trust Deed can help you protect your assets from being snatched back by the lenders, even if you are already facing possible repossession of your property.

Could all my debts be included?
Loans, credit card debt and store card debt can all be included in a Trust Deed, not to mention any arrears on household bills. As long as your debts are unsecured – that is, none of your assets, such as your property or car, have been used to guarantee payment of the debt – they can be included.

Why not just get a consolidation loan instead?
There are three very good reasons to go down the Trust Deed route rather than take out a consolidation loan. First, a consolidation loan gets you deeper into debt, not out of it, because you are taking on more credit. Second, the terms of consolidation loans are usually taken out over a longer period, which means you end up paying more money back in interest. Third, unsecured debt is usually accompanied by high interest rates, in some cases as much as 30% APR, and occasionally charges. On the other hand it will freeze the interest and charges at the point the agreement is taken out and the creditor cannot change them.

Unfortunately with consolidation loans there is every chance you may never repay the total sum, getting you deeper into debt.

Will it affect my credit rating?
Yes, your credit rating will be affected when you enter into the agreement, but usually only for the duration of the plan and not far beyond it. In fact, you are usually not allowed to apply for further credit in excess of £250 until your Trust Deed has been completed. Once this period is over you are free to apply for credit again.

How do I find out if I qualify for a Trust Deed?
The most important thing to do now is to take advice from one of our qualified Trust Deed Advisors, who will take you through all of your options and make sure it is the right decision for your individual circumstances. If it is clear that a Trust Deed is right for you, we can make a recommendation of the most appropriate person to help you set it.

More About the Author

These seven simple words - dream big, work hard, make it happen - have been at the forefront of my mind this week. I don't know whether it's because of the sentiment of a brand new year, but I've been feeling super motivated to dream a little bigger, work a little harder, and make things happen this year.

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