Financial crisis can take place in anyone’s life. Bankruptcy is not only a solution to get rid of all that stress and burden. There are other simpler options to seek to get out of your debt crisis. To know more about various such debt management arrangements click here. An online portal, like www.debt.org, can guide you on how to choose the most suitable debt controlling mechanism from multiple choices available.
One such option is a trust deed, which is a voluntary agreement between you and your creditor where you agree to pay a part of the full amount you owe. This is done by transferring your valuable assets to the name of the trustee who sells them off in order to make the payment to the creditors. This way you can save yourself from being flagged as a loan defaulter on your credit report. After the expiry of the period for which the trust deed was valid, any pending dues will be written off, and the creditors lose the right to object to it. This process is called “being discharged”.
A further advancement to this arrangement of the regular trust deed is the protected trust deed. Under this process, your trustee issues a letter to your creditors mentioning that your debt will be protected. Creditors have five weeks to raise any questions and objections to it. After that period, a lack of reply is considered as consent, and the trust deed gets protected which means the debt will be frozen and will not incur any interest liability fines. All you need to worry about paying is the underlying debt amount.
Certain debts which do not come under the criteria of trust deed include fines and penalties imposed by the court, a mortgage and any liability paid to an ex-spouse such as child support or student loan.
Some advantages of signing a trust deed are as follows:
· As soon as the creditor agrees to the terms of the trust deed, the debt freezes, which means there will be no interest charged on the pending debt.
· You have the right to keep your bank account active. Although your check book and overdraft facility will be taken away, you can use your debit card.
· Getting involved in a trust deed won’t affect your employment. In fact, you will still be able to use a portion of your monthly earnings even if you are committed to paying an amount towards the trust deed.
· You can enter into a trust deed without putting your home at risk.
Before considering a trust deed, one should be aware that you will need to keep a surplus budget for the full term of the trust deed. Signing a trust deed can affect any renting or purchase agreements you make in future and your involvement in trust deed will be updated in the public credit registry known as the register of insolvency.
How effective the trust deed rout will be for you depends on your financial situation. If you are struggling to make monthly payments correctly, consider this debt management options as it is the most effective.