Trust deed what does it mean

A trust deed is a voluntary agreement between you and the people you owe money to also called your creditors. You agree to pay a regular amount of money towards your debts and at the end of a fixed time the rest of your debts will be written off. All your belongings and property your assets are passed to someone who will look after your financial affairs.

They are called your trustee. The trustee aims to pay your creditors as much as possible of the debt owed to them. This may involve some of your belongings or property being sold so that the money raised can be paid to your creditors. A trust deed can become 'protected' if the majority of creditors are happy with the terms of the trust deed. This means that the trust deed is binding on all creditors and they cannot take any steps to recover the money owed to them.

If a trust deed is not 'protected' then it will not be binding on all of your creditors and they could still take action to recover the money you owe them.

A trust deed is only one of the options available to you if you have debt problems. You should get advice from a money adviser to help you decide what is the best option for you. Check if you can speak to a money adviser at your local Citizens Advice Bureau. Or check where you can find free debt advice and a money adviser on the MoneyHelper website.

Any debts you owe to people or companies in the EU might not be covered by a trust deed. Your creditors could keep asking you for money, for example by calling you or sending you letters. If you live in the EU, they could take you to court in the EU. If you are considering setting up a trust deed, you will need to think about how much income you have to make contributions, what might happen to your home and the costs of a trust deed.

You will usually need to have enough income left over after you have paid for essentials called disposable income to make a contribution towards your debts. Disposable income is assessed by working out your usual income and expenditure over a month.

Then you can see if you have any income left after you have paid for all your essentials. You can't set up a trust deed if your only income is from benefits. If you have some other income as well as some benefits, any contribution you make towards your debts can't include any money from your benefits. If you have enough disposable income to be able to pay off your debts in full in less than 4 years, then you will not be able to set up a protected trust deed.

If you own your own home and you set up a trust deed, you may have to sell it in order to raise money to pay towards your debts. In some cases, if you have little or no equity in your home, you may be able to set up a type of protected trust deed which does not include your home.

The equity in your home is the amount of money that you would have left after selling your home and paying off the mortgage.

November 08, To top. Sign up for free and get access to exclusive content:. Free word lists and quizzes from Cambridge. Tools to create your own word lists and quizzes. Word lists shared by our community of dictionary fans.

Sign up now or Log in. Definitions Clear explanations of natural written and spoken English. Click on the arrows to change the translation direction. Follow us. Generally, borrowers have ample opportunity to save the house, but it cannot be repurchased once sold. On the other hand, mortgages recognize a redemption period, which means that borrowers could reclaim their property within several months or years. There are more than thirty states that permit the use of trust deeds.

Some of these states enable the use of both trust deeds and mortgages. Speak with real estate lawyers in your state to determine which laws apply to your specific situation. The types of repayment contracts also differ when it comes to mortgages vs. Trust deeds utilize promissory notes to facilitate the transaction. In contrast, lenders offer mortgage notes to manage it. People erroneously refer to all home loans like mortgages.

However, a mortgage is only genuine when a mortgage note backs it. Trust deeds are the legal instruments that support a non-mortgage home loan. Consequently, mortgagors favor trust deeds in states that permit them. They will always spend less money, time, and attention on trust deeds over mortgages.

These transactions are significant, and vulnerable parties need to protect their financial interests. Real estate lawyers in your state can offer legal advice and guidance throughout the drafting or negotiating process.

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