The first step to enter a trust deed is getting advice from an accredited source such as a qualified debt advice charity. A lot of people have been wrongly advised to enter a trust deed without being aware of the negative consequences which could follow.
As shown below there are three main steps to enter a trust deed and it’s important before anyone considers this debt solution they understand this process. Always seek trust deed advice before entering this debt solution.
Getting Debt Advice
First people need to find out whether a trust deed is the best debt solution for them and if it will solve their financial problems. This is an important step when considering how to enter a trust deed.
It’s important to make sure the organisation is accredited with the financial conduct authority and a charity registration number if applicable.
The debt advice organisation will take an income and expenditure along with the level of debt to assess your suitability for the trust deed.
Once the organisation has decided someone can enter a trust deed they should either contact an insolvency practitioners or begin collection of relevant documentation.
Contacting Insolvency Practitioner
An insolvency practitioner is the person who puts forward the trust deed proposal to the creditors, collects payments and generally manages the debt solution.
They will usually confirm if the trust deed is the right solution, so they will have to carry out their necessary checks before allowing someone to enter a trust deed.
A letter will go to each creditor along with the proposal to repay the debt over the agreed period of time. The trust deed proposal will outline how the solution will be managed and estimate how much money will be returned to creditors at the end of the solution.
Enter A Trust Deed
On the basis that the majority of creditors or 1/3 in value don’t rejected the proposal it will be protected within 5 weeks from the date the letter is issued.
Once the trust deed is protected all interest and charges must be frozen, threatening contact from creditors must stop and it cannot be changed by either party.
It will allow the person in debt to put a date in the calendar when they will be debt free, so long as they keep making payments as proposed.