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Do I qualify for a Trust Deed?

Trust Deed | Guide

To qualify for a Trust Deed, you need consider the following:

The types of debts you have – a Trust Deed is only designed to help borrowers struggling with unsecured debts, which includes things such as credit cards, personal loans and overdrafts. You'll need more than one unsecured debt to qualify for a Trust Deed. If you have court decree against one or more of your debts, you can still qualify, as a decree simply confirms by the court how much you owe to your lender or lenders.

Although you can't include any secured debts, such as a mortgage or secured loan, in a Trust Deed, your monthly payments will be calculated to leave enough room to pay these, and your other essential outgoings.

Can you commit to regular monthly repayments – the idea of a Trust Deed is that you'll commit to a single, reduced payment per month, over an agreed timeframe, usually four years. You'll need to be able to keep up with these payments. If you don't, your Trust Deed could fail, possibly resulting in sequestration.

Do your lenders agree? – enough of your unsecured lenders have to agree to your Trust Deed before it can go ahead. As long as the terms of your Trust Deed are accepted by at least half of your unsecured lenders, or by lenders accounting for one-third or more of your debt, it will become 'protected' by law.

You can’t set up a Trust Deed on your own, because it’s a legally binding debt solution – you’ll need to go through a qualified insolvency practitioner.

Next: How do I set up a Trust Deed?

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