After your Trust Deed is complete, the day you make that last payment is a great day. What an achievement to be debt-free at last! You might feel a mixture of relief and apprehension.
When your next wage packet comes in all of it will be yours to spend as you wish, but should you? And what about credit? Will you ever be able to get a mortgage/credit card/loan again?
Here are a few pointers to help you as you get to grips with debt-free living now your repayment plan is finished:
Be Patient For A Little While Longer
It may take a little bit of time for your Insolvency Practitioner to tie up all the loose ends of your Trust Deed. You might not receive your discharge letter for a little bit of time. The final payment has to be made to each creditor and the relevant paperwork about writing off the remainder of your debt needs to be sorted out.
Keep Up With Your Budget
Your Trust Deed provided you with valuable budgeting skills. These will form the foundation for your debt-free future. You will probably want to build some treats into your budget, but for a few months we recommend to keep going as you have been and save some of your surplus income into an emergency fund.
Have A Goal
Now you have some disposable income, you can start to make plans for the future. You might want to go on a trip or save a deposit for a house. You might even like the idea of starting your own business one day. Use your budget to work out how much you might need to achieve your goals and when you could do it by.
Rebuilding Your Credit After A Trust Deed
Your credit rating will have been affected by of your Trust Deed and this will take some time to improve. You can expect to see a reference to the Trust Deed on your credit file for six years. However, that doesn’t mean you can’t slowly and carefully begin to rebuild your credit.
The most recent events on your credit history outweigh events that happened some time ago so this is an opportunity to overlay some good credit events on top of your previous credit problems.
If you have a mortgage, make sure you make every payment on time. The same goes for any other payments you are making on items that could not be included in your Trust Deed.
There is also another way, but this is only an option if you are disciplined and it suits your situation and attitude. If you know that you have a problem with self-control when it comes to credit, do not attempt this.
After your repayments have finished, you should be able to obtain a credit card with a very low monthly limit that is specifically designed for people who have financial problems.
These usually have very high APRs, but for credit rebuilding purposes that doesn’t matter. Use the credit card to buy one thing every month – perhaps a weekly shop or a tank of petrol – and then pay off the balance immediately.
This is very important so you do not get charged interest. Keep doing this month after month and you’ll begin to build up a good credit record.
Avoid Temptations To Overspend Or Get Into More Debt
There will always be temptations, but be super vigilant and consider whether each action carries serious risks, such as:
- If you are using your credit card to rebuild your credit, don’t use it for buying other items besides that one monthly credit-building purchase
- Don’t allow friends to persuade you to spend more than you know you can afford. If necessary, take cash out with you and leave your cards behind
- Don’t overspend as an antidote to the four years spent paying your Trust Deed
- Be wary of special deals or discounts on store cards
- If you know you had a weakness for retail therapy in the past, stay away from the shops or leave your purse behind so you cannot be tempted to spend anything
Life after a Trust Deed can feel a little overwhelming, so it’s important to slow down once the initial rush of excitement passes and take some time to plan your future.
Staying free from debt can be tough, especially if you’re surrounded by people who think nothing to popping everything on credit, but the more you prepare and plan the easier it will be to say no to debt if it ever comes calling again!
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
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