In reality, if you have suffered for any prolonged period of time with debt, you are probably paying much more to your debts than you can reasonably afford.
What is a Trust Deed?
A Trust Deed is a voluntary agreement between you, your creditors and your appointed Trustee (an Insolvency Practitioner) to repay part, or all, of what you owe to them. It involves a degree of debt forgiveness, i.e your creditors writing off some of what you owe.
A Trust Deed will usually be based around your income and what you can reasonably afford to repay back to your creditors (those you owe money to).
The best way of calculating what you can reasonable afford is by going through your monthly income and expenditure. We will do this with you. What are you left with after you have paid all your essential bills such as rent, council tax, tv licence, food, clothing, travel, telephone bills etc? This is what is known as your disposable income – i.e what’s left over to pay your debts and this is the amount that is deemed to be what you can reasonably afford to repay.
For most people we have dealt with in the last year, what is left is not enough to cover the minimum repayments to debts. So what tends to happen is people borrow off of credit cards, loans, friends, family or by extending overdrafts so that they can meet these debt commitments. What then happens is you get caught in a cycle of borrowing from one creditor to pay another. In these circumstances a debt solution is generally what is needed to solve the problem and stop the cycle. A Trust Deed can assist.