Trust Deeds and Car Finance
Protected Trust Deeds can incorporate a wide variety of debts into one, affordable monthly payment. This can include:
- Credit Card debt
- Payday loans
- Store Card debt
- Personal loans
- Council Tax Arrears
- Car Parking charges
- Rent arrears
- And many more
But when it comes to car finance, it is not entirely straight forward. If you took out a personal loan, such as from your Bank, in order to buy a car, it is possible that it can be included in your Trust Deed. This is because, regardless of how you spent the money, it is legally a normal loan.
When it comes to Hire Purchase agreements, however, you cannot include the debt into a Trust Deed. This is because this a secured debt, which means that the debt is secured to an asset. Another example of a secured debt is a mortgage. Secured debts cannot be included in Trust Deeds.
This does not mean that your car finance is not considered. When your affordable monthly payments are calculated, the amount that you pay to maintain your Hire Purchase agreement will be added to your essential expenditure, as long as it is not excessively large. This means you are usually able to keep your car.
Keeping your car
A huge advantage of a Trust Deed, when compared to Sequestration, is that you should be able to keep assets such as your car. As discussed above, your Hire Purchase agreement, while unable to be added to your Trust Deed, is considered in your Trust Deed. This, however, is complicated by the value of your car.
If your car has equity of £3,000 or more, your creditors may ask for this equity to be released and added to your Trust Deed. Equity is the amount of profit you would make if you were to sell something. Rather than selling your car, you can release its equity by trading it in for a cheaper model. This allows you to keep a car for your use. If your car has less than £3,000 in equity, you shouldn’t need to worry about needing to trade in your car.
For more information about Trust Deeds, and how one could help you out of debt, click here.