Although the letters and calls you may have experienced recently may suggest otherwise, your creditors want to help you with your situation and recover as much of their debt as possible. If you communicate honestly with them about your situation, they will understand. In most cases, they will accept less than what you owe if that is all you can afford, providing they are satisfied that you will keep to any agreement.

Sequestration (bankruptcy) is costly and time-consuming, and a large amount of the money raised from sequestration (bankruptcy) will be used to cover professional fees; therefore, creditors would in most cases prefer not to resolve the situation in this way.

A Trust Deed offers the simplicity of a repayment arrangement between yourself and your creditors with legal backing without the high cost and low returns of sequestration (bankruptcy).

Your creditors will welcome a Trust Deed, where appropriate, as an effective resolution to the situation that you find yourself in.

No, but if you have equity, this will be considered and may need to be released to pay your creditors. If the property is joint-owned, an appropriate equity portion will be considered.

Usually no, a Trust Deed is an arrangement for responsible people who want to deal with their debt problem, and as such, you will not prejudice your employment. Your employment status may be affected if you work in accountancy or law, so we advise applicants to check your employment contract.

You can include debt to banks, finance companies, credit or store cards, HM Customs & Excise (VAT), Inland Revenue, and loans made by your friends and family. Debt that cannot be included are mortgage debt, hire purchase, student loans, fines, debt incurred through fraud, maintenance, and child support arrears.

It is important that once in a Trust Deed, that monthly payments are made as proposed. If at any point your financial situation changes and the monthly payments are no longer affordable, then you must consult immediately with your Trustee.
If you do not keep up payments then your supervisor can initiate sequestration (bankruptcy) proceedings against you.

Your remaining debt will in effect be written off and you will be free from debt.

You can choose not to notify your family, and even your partner, but we would advise that you do inform those that are close to you.

Your Trust Deed will cover your unsecured debt and arrears, such as unsecured loans, credit cards and rent arrears.

Secured debt is secured against assets you own, such as a house or a car. If you fail to keep up repayments on secured debt your assets may be at risk. Unsecured loans are not secured on any asset.

If the Trust Deed is accepted it will prevent any further action, including the addition of charges, and all interest will be frozen.

The process of preparing the Trust Deed will begin immediately and is usually set-up and fully in effect within 6 weeks.

There are other alternatives to a Trust Deed if it is not approved, the insolvency practice will advise the next course of action if the Trust Deed fails.

To learn more about managing debt and receiving free, impartial debt advice, visit Money Helper or read about options for paying off your debt

When setting up your agreement, your Insolvency Practitioner will send a proposal to your creditors. Creditors then have a period of 5 weeks within which they can raise objections. A Trust Deed becomes protected if that period passes with no objections raised, or when objections raised by creditors are settled.