Real Life Questions From Real Life People...
It’s not always over-spending on consumer goods that pushes people into considering debt solutions like Protected Trust Deeds. You may have been forced into debt by circumstances such as illness or redundancy or perhaps even a spendthrift spouse or partner has led you down this road. Whatever has happened, if sequestration is looking likely then a Protected Trust Deed could be what you need to start pulling your life back together and become debt free.
A Protected Trust Deed can improve your life considerably. You make an affordable monthly payment that takes in account your current income and outgoings, and every month this is distributed to creditors by a Trustee acting on your behalf. You don’t have to talk to any of your creditors – your trustee does it for you - so there’ll be no more letters or phone calls, and no more threats or demands. But it is not to be taken lightly. You cannot accumulate any more debt or have credit above £250 while making payments and it is a serious commitment for three years. In addition, once your Trust Deed is set up your Trustee is required by law to publish a notice in the Edinburgh Gazette, which could affect your reputation.
To help you decide whether a Protected Trust Deed is right for you, the following are real questions our Advisors have been asked in the past by people just like you who are experiencing debt problems:
Q) Before I sign a Protected Trust Deed, can I speak to several Insolvency Practitioners and then choose one based on the proposed repayment figures?
Unfortunately no. Because of the amount of work involved negotiating your repayments with creditors, you will have to choose the Insolvency Practitioner you wish to work with before any payments will be proposed. Spend some time shopping around for a good company (our Protected Trust Deed advisors will give you some recommendations when you call), explain your situation thoroughly and ask lots of questions so you can make the right decision for your circumstances.
Q) Can I back out of a Trust Deed if I cannot get it protected?
A Trust Deed is a legally binding agreement. If you cannot get your Trust Deed protected – for example if your creditors object - and you decide you do not want to continue making payments, the Trust Deed will be considered to have failed and your Trustee can petition for your sequestration. However, this very rarely happens unless your creditors believe that they will get more money from you through bankruptcy than they would in a Protected Trust Deed.
Q) Do I have to tell my employer if I have a Protected Trust Deed?
There are certain jobs which require you to disclose if you have ever had a Trust Deed or Protected Trust Deed, so it is worth reading your employment contract to check if it contains a clause to this effect. Most employers are understanding should it happen and it is highly unlikely it will affect your job.
Q) What happens if I lose my job or my income drops while in a Protected Trust Deed? What if I cannot afford the fixed repayment amount?
The first thing you should do is inform your Trustee as soon as you know you will have a problem paying. They may be able to arrange a payment break until you find another job. However, if circumstances look like you will be unable to because of, for example, long-term illness your Trustee may be forced to petition for your sequestration. However, this is usually the very last resort.
Q) What if I get a pay rise or move to a better paid job while in a Protected Trust Deed?
You should declare this to your Trustee who may decide to recalculate a new monthly payment that reflects the increase. From time to time your Trustee will request bank statements, pay slips and a statement of affairs to ensure that you are still able to meet your monthly payment.
Q) Would I be able to keep my car? I use it for work…
If your car is an inexpensive model and is needed for work then you should be able to keep it. However, if it is a very expensive model and its sale could release money to pay your creditors, you may be required to sell it and buy a less expensive vehicle.
Q) What happens if I have forgotten about a debt and I start receiving letters from the lender? Can I just add that one in to the Protected Trust Deed?
With all the stress involved with sorting out a Protected Trust Deed sometimes debts can be forgotten, especially if they are the “buy now, pay later” type of debts which have become common when buying large or expensive household items. If one pops up, simply tell your Trustee as soon as possible and they will arrange your Protected Trust Deed to accommodate it.
To read part 2 of this article, click here.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
|3||Credit card 2||£4,092|
|4||Credit card 3||£5,399|
|4||Credit card 4||£5,200|
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here