Advice on Protected Trust Deed

Broke_Stu

Hi, I hardly post here but i wanted some impartial advice on what might be the best options for me in managing my debt.

Currently in a payment plan with StepChange and have been for a couple of years, have managed to bring my debts down from 15k to 10k approx in that time.

I pay around £245 a month in my plan and will do for another 3.something years to become debt free.

Recently I have been getting a lot of calls from a company prompting me to opt for going for a protected trust deed and get a lot of my debt written off and pay much less on a monthly basis. Sounds very appealing but I'm wary of these companies that harass you to do what they tell you to.

The issue for me is what is the impact on my future finances if i opted to enter a protected trust deed? does it badly damage my credit rating? does that even matter given that its probably not too healthy anyway. Kinda at that stage where i dont want anymore credit anyway but that might change if i plan to buy a house in the future.

I should mention i live in Scotland as i understand the debt laws are slightly different here. Also i am currently in permanent full time employment and can cope reasonably well with the current repayment to StepChange.

Could anyone offer some impartial advice on what might be my best move?

Thanks in advance.

tallyhoh

I have had a quick look & dont think you will be any better off, actually worse as I am sure there is a fee to pay.

kiora

Hi Stu

For the last 18 months I have been on a DAS as I also live in Scotland, due to changes in my circumstances I could no longer afford it, I contacted a company called Simply Financial Solutions with regards to a Trust Deed as it means my debt would be cleared in 4 years rather than 10 years, it may be worth contacting them as they are an excellent company, within a week I had my 1st appointment and now I have signed a Protected Trust Deed, its such a relief but if you feel that you can carry on with debt management scheme then good luck with it, there is I would like to add no cost to set up the Trust Deed

beanielou

I think there is a hefty charge to set up & continue in a protected trust deed.
The company who are in touch with you are not doing it out of the goodness of their heart.

kiora

beanielou wrote: »

I think there is a hefty charge to set up & continue in a protected trust deed.
The company who are in touch with you are not doing it out of the goodness of their heart.[/QUOTE

There is no cost to the person entering the Trust Deed, the cost is met by the IP, who reclaims the cost from the creditors, my Trust Deed is for approx £13k and I will be paying £140 a month for 48 months then all debt remaining is written off, the monthly payment does not change

dancingfairy

I would imagine that you are currently in an informal agreement such as a dmp (Debt management plan). It sounds like a protected trust deed is a legally binding solution similar to an IVA and would last 3 or 4 years.
It could cause you issues in terms of your career and working in certain profession such as law or accountancy.
I would imagine that you would have to declare it if ever asked (similar to bankruptcy) and it would make it more difficult to get a mortgage.
You would be committing yourslef to payments for the next 3 or 4 years.
Now obviously it would protect you from your creditors taking further court action but you would also be bound by it.
If you enter it I believe it would stay on your record for 6 years (so another 6 years).
It seems a little overkill for your situation but obviously would give you security against your creditors taking further action. Given you are so far into your dmp and 3 ish years to the end I can't see that it would offer many benefits to be honest. If your creditors haven't taken action so far I doubt they will suddenly start taking action against you now.
IF you feel that it is an option worth exploring then as a first step I would talk to stepchange and ask their opinion. IF they recommend it then I would be shoppping around and I definitely would not be touching any of those cold calling companies with a bargepole.
I personally would suggest you continue as you are.
df

beanielou

The charge for PTD is built into your monthly payment.
Unless changed very recently charges paid by debtor & not creditor.

coolcait

kiora wrote: »

beanielou wrote: »

I think there is a hefty charge to set up & continue in a protected trust deed.
The company who are in touch with you are not doing it out of the goodness of their heart.[/QUOTE

There is no cost to the person entering the Trust Deed, the cost is met by the IP, who reclaims the cost from the creditors, my Trust Deed is for approx £13k and I will be paying £140 a month for 48 months then all debt remaining is written off, the monthly payment does not change

Trust deeds can be tricky.


If your circumstances change 'for the better', your monthly payment may increase. This increase will be calculated by your trustee.


If your circumstances change for the worse, your trustee may extend the length of the TD, to 'ingather' the amount you said you would pay into it (£140x48=6720).


If you get a windfall of some kind (inheritance or lottery win, for example) the trustee will probably take most, or all, of it.


If you get made redundant, the trustee may be able to take some of the redundancy payment.


If you have a property with equity, the trustee will expect that equity into the TD.


If you don't make your monthly payments, or 'fail to comply with' the terms of the trust deed at any time, your trustee can refuse to discharge you from the TD, and you'll have all your debts back. It's unlikely that they will have reduced, because...


The trustee doesn't meet the costs of the trust deed (unless they're really unlucky!). They gather in the money you pay each month. Then they take their fees. Then they pay your creditors out of the money - if any - that is left over.


As someone else has already pointed out, a trust deed is insolvency - the same as bankruptcy.


But, you should already know everything I have just posted, because your adviser should have explained it to you.