A trust deed is a good debt solution to consider when you’re dealing with debt problems.
If you’re not sure or you think that you need extra advice, you’ve come to the right place.
I have compiled a complete article explaining when you qualify for a trust deed and how to calculate it using a trust deed calculator.
Let’s get right into it.
How A Trust Deed Works
It is an agreement authorised and regulated by the Financial Conduct Authority which can serve as a good debt solution. It is a good option if your income and expenditure don’t allow you to keep up with your monthly payments.
You can reduce your monthly payments significantly by getting this arrangement. It is basically an agreement between you and your lenders in which you transfer a piece of property to a neutral third party trustee.
This property is transferred back to you after you clear your debts with your creditors.
What happens is that the trustee is given your property in his name. Then, you keep on paying your monthly payment until your debt ends. After the debt is clear, your property is transferred back from the trustee’s name to your name.
If you cannot keep up with the monthly payments and default on your debt, the lenders will get your property transferred from the trustee’s name to their name. This is a good debt payment plan because some of your debt is also written off when you take this route.
The problem arises when you are no longer able to pay back your debt. If you cannot clear your dues, your trustee will sell your property and use the money to pay back your creditors. You will get the remaining amount for yourself but your asset will be gone.
This is why you need to be careful and make sure that you can keep up with the repayment plan if you don’t want to lose your property.
Who Qualifies For A Trust Deed
To qualify for a trust deed, you need to fit pretty narrow eligibility criteria.
First of all, you must live in Scotland as only residents of Scotland are allowed to get this arrangement. Also, if you have lived in Scotland in the past 12 months, only then can you get one. People who have a place of business in Scotland may also be able to get a trust deed.
You also need to have more than £5000 in unsecured debt and you must be insolvent as well. Being insolvent means that you are in an unfavourable financial position and are unable to pay off your debts efficiently.
More specifically, it means that you cannot pay your debts back in full in under 48 months.
If your debt can be paid off under 48 months with the current monthly repayments you’re paying, you probably won’t be able to get a deed of trust.
You must also be the homeowner of the property that you are about to put into this arrangement.
Moreover, not all kinds of debt can be paid off using this arrangement. You can only use it to pay off unsecured debts like credit cards, store cards, and personal loans.
Before deciding on anything, you should also hire an insolvency practitioner to get expert advice. You should always invest in expert debt advisers who can guide you to better debt solutions. Contacting an insolvency practitioner would be appropriate for debt advice in this case.
Trust Deed Calculator
If the narrow eligibility criteria discussed in the previous section seemed overwhelming, don’t worry because there is a tool to help you. Online calculators which can help you in determining whether or not you will qualify for this arrangement.
To find out if you qualify for this arrangement, simply visit this website and follow the instructions.
It will tell you whether you can get this debt solution or not and you won’t have to spend hours of confusion trying to check it on your own. Nonetheless, getting help and advice from an insolvency practitioner is still a good idea.
Frequently Asked Questions (FAQs)
Is A Trust Of Deed A Good Debt Solution?
If you’re struggling with debt, a security trust deed is a good solution. However, it is a solution subject to individual circumstances. You should only go for this option if other debt arrangement schemes aren’t affordable for you.
Go for other debt solutions if you can because in this case, your property is at stake and you could lose it if you can’t keep up with the monthly payments.
Does A Trust Deed Affect Your Credit Rating?
Yes, a trust deed definitely affects your credit rating and it will appear on your credit file for 6 years from the day that your property was secured.
Can A Trust Deed Only Include Unsecured Debts?
Yes, a trust deed can only include unsecured debts. Other debts are not included as they are prioritized over unsecured debts. This means that you can only write off debts like payday loans, credit cards and store cards.
Can You Go Into A Trust Deed Twice?
Yes, you can enter two at once, but you must be discharged from the first one to be able to enter the second one.
Can I End My Agreement Early?
Yes, you can end your agreement early by paying your debt back in full. If you receive a windfall, you can end your arrangement early and pay your debt back in full. You will again receive full ownership of your property.
Getting a trust deed is a good solution if you are good at managing your money. But keep in mind, that if you aren’t able to keep up with the agreement, you will have to face grave consequences.
Getting professional debt advice is very important. Keep reading our articles for more free advice.
If you need additional help or advice regarding debt problems, make sure to reach out on the email provided. I’d be happy to help.