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Trust Deed Explained
The proposal has to be drafted by an Insolvency Practitioner (I.P.) and put to the creditors who then have the chance to accept or reject it. If sufficient numbers agree to the terms (or fail to object) within a 6 week period, the Trust Deed becomes Protected, which means it is legally binding.
After this stage, as long as the payments are maintained the creditors may not add interest or charges to the accounts, take any form of legal action against the debtor or even contact them in relation to the debts.
Protected Trust Deeds therefore are a very good way for debtors to absolve themselves of their debts while maintaining an affordable payment to the creditors. The Protected Trust Deed does not carry the same stigma as a bankruptcy, nor does it affect the debtors’ credit rating in the same way.
For the creditor it means they are recovering some of the money owed and generally this is a far greater sum than through the bankruptcy. For information or advice relating to Protected Trust Deeds, contact Best Solution on 08000 319450
Personal debt in the UK rises above £1 trillion
The amount of money owed by consumers has broken through the symbolic £1 trillion barrier for the first time.
The Bank of England (BoE) has said that consumers owe more than £1,000bn on cards, mortgages and loans.
According to the BoE, about 80% of UK personal debt is in the form of loans secured against homes, such as mortgages and re-mortgages.
According to the BoE, about 80% of UK personal debt is in the form of loans secured against homes, such as mortgages and re-mortgages.
Debt experts are warning consumers to think long and hard about how to manage their debts as interest rates rise. Informal debt management is becoming more popular as consumers realise the risk posed by consolidation loans.
After taking on an extra £11.23bn of debt in June, consumers now owe £1.004 trillion or £1,004,290,000,000.
Around six million families are already struggling to keep up with their debt repayments, according to the National Consumer Council (NCC).
The BoE has raised interest rates four times since November, taking the base rate to 4.5%.
The BoE's rate-setting committee meets next week to decide whether to lift rates again.
The rate setters want to restrain inflation, as well as galloping house prices, consumer spending and debt levels.
At the same time, they need to avoid causing a downturn in growth and manufacturing, or triggering a sudden slide in property prices or consumer demand.
But another set of robust lending figures, combined with upbeat housing market data from Nationwide building society, also released today, may force the bank to act again in August and add another quarter point to the cost of borrowing.
Some debt advice groups have said further interest rate rises could force heavily indebted consumers into deep trouble, especially as most debt owed is secured against properties.
The Bank of England's chief economist Charles Bean yesterday played down concern about growing debt.
The £1 trillion figure, he said, did not mean UK households were sitting on a "time-bomb", since an increase in borrowing had been matched by an increase in financial assets.
Hilary Cook, investment strategy director at Barclays Stockbrokers, agreed with Mr Bean's comments.
She said the £1 trillion landmark was wasn't as "scary" as it looked, because the value of people’s assets has risen by around 60% in real terms during the last nine years.
"We are borrowing against assets which have gone up massively, interest rates are still relatively low and we all have jobs," she said.
But workers on the debt frontline remain worried about the personal cost of taking on too much debt.
There are now a trillion reasons why consumers need to stop and think if they can afford their debt burden, particularly if interest rates go up.
If you are affected by unsecured debt, you can ask Best Solution for help using our contact form. You will pay less to clear your debts with Best Solution than with "free" or "charitable" debt management services.
An adviser will be able to discuss your requirements and determine whether debt management is suitable. This advice is impartial and completely free.
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