If you are in debt right now and finding it hard to pay all of your debts, you might think that the best solution to your dilemma is to file for bankruptcy. But there are actually other options aside from that.
You may want to enter into a trust deed instead. A trust deed is a voluntary agreement between you and the people you owe money to. With a trust deed, there is usually less restriction than when you have to apply for bankruptcy.
- It may not include all your debts – not all debts can be included in the trust deed. You need to do your research if you want to be sure that you can add your particular debt to the agreement. You can look for the information online, as there are many sites that give facts and information. Check out Creditfix – Trust Deed for more helpful facts about it that you should know.
- It is not a way to lessen your debts – you need to understand that entering into a trust deed will not lessen the amount of money you need to pay. You may find advertisements ensuring you that your debt will be slashed by half when you go with a certain company, but that is not the truth. A trust deed is just a way for you to be able to pay the debt over a period years without having to give up too many assets or filing for bankruptcy.
- It may not be available for everyone – a trust deed is only available for people who live in Scotland. If you reside in England or Wales, you need to enter into an IVA or Individual Voluntary Agreement instead. Also, your debts need to add to a certain amount for you to be approved for a trust deed. If you only a few thousand pounds of debt, and you only owe one creditor, it is possible that you will not be approved.
- It would be advisable to not take out another loan until you are done paying – you need to realize that your credit rating may not go up during the time that you are paying. Most credit reference agencies will have the information about your trust deed for up to six years. It would be smart to not get any further loan during the time period. You already entered into the trust deed because you were heavily in debt, so it would not be a good idea to owe more people money when you are not yet done with paying your precious debt.
- It’s important that you immediately contact your trustee regarding changes in your income – you will be asked about your disposable income for the trust deed. Disposable income is your income minus your expenses per month. IF there will be changes in your income, for example, you lost your job or you had a child, you need to go to your trustee and tell them about the changes so that you can come up with a solution that will help your situation.