If you are in debt and cannot see a way of making all the repayments each month, it is time to take action before the situation spirals and gets really out of hand.
If you are in Scotland, you can arrange to set up a trust deed agreeing to make monthly affordable payments over a fixed term, which can be up to four years. If there are any debts outstanding at the end of the fixed period, they will be written off so you have nothing more to pay, explains Moneysupermarket.com.
Trust deeds are only available in Scotland; however, you can consider taking out an individual voluntary agreement (IVA) in England, Wales or Northern Ireland, which works in a similar way.
You can get information about trust deeds or IVAs from a specialist company such as https://www.carringtondean.com/.
Before taking out a trust deed, there are five essential facts to consider.
Legally binding
This arrangement has to be set up by an insolvency practitioner, who will act as your trustee and deal with your creditors for you. The trust deed you sign is legally binding and covers unsecured debts only, such as credit cards or loans. It cannot be used for mortgages or hire purchase loans.
Need creditors to agree
The trust deed cannot be set up unless at least 75% of your creditors agree to it. Your insolvency specialist will be able to negotiate with your creditors on your behalf.
You shouldn’t have to sell your home or car
The trust deed will take into account any equity in your home, which is the amount over and above your mortgage. You do not usually have to sell up and you usually get to keep your car, unless it is really valuable.
Assets could be at risk
If you fail to stick to the trust deed arrangement, however, your assets could be at risk, as creditors could start bankruptcy proceedings against you. If you feel the repayments are a struggle or are having trouble, talk to your trustee.
Fees involved
Your insolvency specialist will usually charge you a fee for his or her work and this money will be taken out of your monthly repayments.
When considering any financial matter that could affect your home, career or financial status, please contact a specialist organisation.