Do you have a lot of debt but are still receiving benefits? Well, you need to speak to a debt expert to find out what options are available for you. If you have another income as well as benefits, you might be able to afford the repayments of a trust deed. You should be able to write off some of your unsecured debts after 4 years of payments. However, if your benefits only amount to your income, a trust deed might not be the best choice for you.
Note that benefits are designed to cover your essentials. As such, you might not have enough money to spare and use for your debts every month. If your total repayments every month aren’t acceptable to the lenders, your request for a trust deed will be turned down. Also, a debt expert might not suggest a trust deed in the first place. Some people with very low incomes might not qualify for a trust deed but there are alternatives. There are numerous ways to handle your debt in Scotland, you just have to speak to a debt expert.
Who Qualifies For A Trust Deed?
In Scotland, trust deeds are only available to people who are struggling to repay their debt. You should owe a minimum of £5,000 in individual unsecured debt or a total of £10,000 in joint unsecured debts. Keep in mind that a trust deed is a type of insolvency. Therefore, it’s an option for people who can’t afford to repay their unsecured debts completely. If you qualify for a trust deed and it’s successful, you will be able to avoid sequestration. Find out more at Carringtondean.
For a successful trust deed, you need to have a steady income. That’s because you will agree to repay amounts each month for 4 years. After that period, the rest of your unsecured debt will be written off but you must adhere to the written agreement of the trust deed. If you rely on benefits, there are many reasons why a trust deed is not a good idea for you. That’s because you can’t guarantee that your income will remain the same for the next 4 years so you shouldn’t sign up for a trust deed.
If you are a homeowner, you can use a trust deed instead of declaring bankruptcy. That’s because you have to release your equity on a trust deed to repay to unsecured lenders. However, if you declare bankruptcy, you might be forced to sell your house and any other assets you own. When you release the equity on your house, you will decrease the amount of the home that’s yours thereby increasing mortgage payments.
Note that, if you are not able to release your equity from your house, your trust deed could be increased by 12 months. If you are insolvent, it will remain on your credit report for 6 years. It will affect your ability to borrow money, have a phone contract or work in some professions.