Consumer debts have risen to alarming levels over the past few decades. Thousands find themselves unable to pay back their loans before the deadline, consequently incurring greater charges and runaway interest rates. It often comes to the point that repayment is impossible and they face the threat of sequestration. However, not everything is lost. Those that have a steady income have a number of options when it comes to debt management. They can avail of legal remedies that will help them keep their valued assets like their home and their car.
Individual Voluntary Agreements
The Insolvency Act 1986 introduced the concept of Individual Voluntary Agreements. IVAs are meant to provide UK residents with a reasonable method of settling debts without resorting to a declaration of bankruptcy. Since debtors can no longer meet the original terms of their loans, they will have to propose a new payment scheme and prove that this is the best that they can do under the circumstances. If the creditors approve the proposal, then it will take into effect and supersede the old terms. IVA last for up to 5 years after which the unpaid balance is written off.
Protected Trust Deeds
The Bankruptcy Scotland Act 1983 and 1995 contain the fine details of a concept known as Protected Trust Deed Scotland. However, PTD actually traces its roots hundreds of years back to common law practices. It has been used for centuries in varied forms as remedy for debt-ridden citizens. Only residents of Scotland may avail of it. PTD is very similar to IVAs in that it is a debt management system that consumers can use to avoid bankruptcy. Debtors will have to create a proposal and have it approved by the majority of creditors as well. The repayment process typically spans 3 years and the balance at the end is similarly forgiven.
Since the value of secured loans may be recovered through other means, PTDs are limited to unsecured loans and consumer debt such as credit card bills. The sum of these obligations should not be lower than £4,000 to qualify for this remedy. Applicants must have a regular source of income in order to guarantee a steady stream of contributions to the repayment fund. Note that some employers bar their staff from seeking a trust deed. Thus, the contract will have to be reviewed beforehand. Self-employed individuals can enter into a PTD without any issues. They simply have to submit their transaction papers for the last six months.
Trust Deed Wizard
People who are unsure whether they are eligible can call Insolvency Practitioners to verify or use a Trust Deed Wizard to see if they qualify. Companies that provide this service have professional debt advisers who are ready to answer inquiries around the clock. This is the best way to clarify issues and get personalised advice regarding PTDs. Interested parties can also go to online to try a trust deed wizard which is an app that can quickly determine eligibility based on user inputs. A wizard can also compute for the possible range of monthly payments and the percentage of debts which may be written off.
Generally, a trust deed wizard will ask for a variety of information including the number of creditors owed, the monthly income, the average expenditures, the resulting monthly disposable income, the total unsecured debt, the total credit card debts, and other relevant figures. Wizards will also inquire about employment status and missed payments. Supply the necessary information as accurately as possible in order to get optimum results. Remember that the values produced by the calculator are merely initial estimates. It is still best to talk to a debt adviser or a certified insolvency practitioner for a more accurate assessment.
Trust deeds are incredible tools that allow persons burdened by debt to set things right. Unlike bankruptcy, it is done in a manner that allows them to live decently according to their income. The home equity is protected so the family will not have to move. Interest rates are frozen once the proposal has been approved by the creditors. All of these perks are provided to debtors in exchange for their commitment to the new payment scheme. It should be honoured and respected until the end of the term.