Can a Trust Deed put a stop to payday loan interest charges?
Providing your application is successful, a Trust Deed freezes all interest and charges on your debts, and this can include payday loans.
Following the completion of a Trust Deed, the balance of all your existing unsecured debts that you haven’t been able to pay will be written off – including any interest.
Can a Trust Deed help with secured debts?
It may help to make them affordable again, but it won't actually reduce secured debt repayments, such as your mortgage. The idea of a Trust Deed is that your unsecured debt repayments will fit around your other priority living costs, including any secured debts you owe. You’ll still need to ensure that you are making these secured debt payments outside of your Trust Deed.
Is a Trust Deed safe?
A Trust Deed is a legally binding arrangement. It must be overseen by a qualified professional called an Insolvency Practitioner, who will make sure you understand the terms of your Trust Deed before you begin. For example, if you're a homeowner, you may be asked to release any equity you have in it, if it’s a realistic option. This would be negotiated at the start of the Trust Deed.
Once it’s begun, a Trust Deed protects you and your lenders. Your lenders cannot, for example, make you bankrupt as long as you stick to the terms of the Trust Deed. At the same time, you're obliged to make all your payments, so your lenders should be able to count on recovering a certain amount of the money you owe them.
Is a joint Trust Deed possible?
There is actually no such thing as a joint Trust Deed, but where a Trust Deed would be the best solution for you both, you can both enter separate Trust Deeds that take your joint finances into account. Because both of you are responsible for paying joint debts, these will be including in both of your Trust Deeds. You will both be expected to pay as much as you reasonably can towards your Trust Deed, based on your income and expenditure, taking into account your share of any joint expenses.
Any individual debts, such as credit cards belonging to only one person, would only be included on that person's Trust Deed.
Will my Trust Deed be recorded publically?
The details of your Trust Deed will be published in the Register of Insolvencies, which is a public record.
Can my Trust Deed payments change?
No one expects your life to freeze for four years, which is how long Trust Deeds usually last. Your income could easily go up or down in that time, and so could your costs.
Your Trust Deed will be reviewed each year, but if something changes in the meantime, which means you can't afford as much as you expected, your Trustee might agree to reduce your monthly payments to keep them affordable – the most important thing to do is to let them know as soon as your circumstances change. Likewise, if your income goes up or your expenses go down, you’ll probably have to pay more into your Trust Deed.
If you run into some short-term problems, such as maternity leave or sickness, you might be able to take a break for a few months. However, you might have to make some additional payments later on, so your lenders don't lose out. Whatever happens, your Trustee is there for you, they'll always do what they can to help you make sure your Trust Deed works out.
It’s really important that you keep your Trustee up-to-date when something happens, whether it’s a new job, a lottery win, an inheritance, or anything else that makes a difference to your situation.
Can I save on a Trust Deed?
It's unlikely you'd be able to save during a Trust Deed because you will be expected to pay as much as you can realistically afford towards your debts, without interfering with your essential monthly costs.
I’ve been made redundant on a Trust Deed, what happens?
The most important thing to remember if you're made redundant, is to inform your Trustee as soon as possible. They always need to know if your financial situation is set to change dramatically. You must also inform them of any redundancy payments you are due to receive. Depending on the payments you receive, you may have to put some towards your Trust Deed.
If you contact your Trustee, they may be able to suspend your payments temporarily while you find new work, or another source of income. So as long as the change is only temporary, they shouldn't usually have a problem with this.
Your Trustee may also agree to reduce the amount you have to pay each month if they feel this would be appropriate. Providing you genuinely can't afford to make regular payments, the length of your Trust Deed shouldn't increase.
Your Trustee will consider what has changed in your circumstances, as well as why and how long your Trust Deed will be affected, to decide if it is reasonable to agree to suspend or reduce your payments. But, it's unlikely they'll want your arrangement to fail if there's a chance it could be saved. However, they can only help if you keep them informed of any changes to your financial situation.
Will I be allowed to borrow more money whilst on a Trust Deed?
In some cases it is possible for you to borrow more providing you get permission from your Trustee. This is reserved for emergencies, such as car breakdown or essential home repairs only. Whether they authorise this is at your Trustees discretion. Not seeking their permission could affect the successful completion of your Trust Deed.
Also remember that borrowing more money while on a Trust Deed is likely to be very difficult, due to the impact on your credit rating. What's more, any credit you are offered is likely to carry a high interest rate, and is therefore best avoided if possible, and you need to consider how you will continue your payments to the Trust Deed.