Can I include catalogue debts in my Trust Deed?
Catalogue shopping, like using credit cards and store cards, can provide a handy way of paying for items by spreading the cost over a longer period of time - and although this can cost more (due to interest), some people find the convenience a price worth paying.
However, if you start having problems making your monthly payments to your catalogue debts, along with your other unsecured debts, you could end up needing debt help.
If you find yourself in this position, you'll need to find a way of repaying what you can. If you're a Scottish resident, this could mean a Trust Deed - a legally binding insolvency solution available exclusively in Scotland.
Let's look at how a Trust Deed could help you repay your catalogue - and other unsecured - debts.
How could a Trust Deed help me?
A Trust Deed is designed to help people who have at least £5,000 worth of unsecured debt (or £10,000 worth of joint debt) that they can't repay in a reasonable amount of time.
A Trust Deed works by letting you put what you can afford towards your unsecured debts over an agreed time period. You can include any type of debt, as long as it's unsecured, including catalogue debts. If your Trust Deed runs for the standard time, you'll make your payments for four years.
The basic idea of a Trust Deed is that you'll repay what you can manage, taking into account all your monthly essentials (e.g. rent/mortgage, food and Council Tax). Your unsecured lenders will be prevented from taking any further action against you and, once you've successfully finished your Trust Deed, they'll write off any remaining debt included in the agreement.
Bear in mind that both you and your lenders will be expected to stick to the agreed terms.
Trust Deed: things to think about
Some more important points about Protected Trust Deeds:
• If you're a homeowner, you should be able to stay in your home (which might not be the case if you entered bankruptcy). However, you may have to release some equity.
• A Trust Deed will affect your credit rating for six years, which could make getting further credit difficult during this time.
• It's important to get some debt advice in Scotland to discuss your options before you commit yourself to any particular approach.
Article Updated 12/12/2013