Can Trust Deeds Include the Debts of Others?

23rd September 2010

If you are considering a debt management solution such as a Trust Deed, you need to understand which debts can be included. We consider what happens to debts which are not in your name.

Legally speaking, in the UK you are normally only responsible for debts which have been taken in your name alone or in your name jointly with someone else.

For this reason, if you get into trouble with debt and decide to undertake a Trust Deed, you can only include debts in your name.

Debts in the name of a third party such as your spouse or partner cannot be included.

For example if your living with your partner and a utility bill such as the gas or electricity is in their name, the arrears on this account cannot be included even though you benefited from the use of the utility.

Debts taken out for you by someone else

If you have had the benefit of a credit card but the debt is not in your name, any debt you have incurred cannot be included in a Trust Deed.

For example if you have simply been added as a card holder to someone else’s credit card account, this debt is not in your name.

In the same way, if a family member or friend has taken a loan on your behalf and given you the money, because the debt is not in your name, you can not include it in your Trust Deed.

This may cause a problem as it is likely that you are paying your family or friend each month for the loan and as such you will want to maintain this payment.

However, your other creditors will not normally be happy with this and some arrangement to reduce the amount you pay to your family may have to be made.

Joint debts

If you have a debt which is in joint names with your spouse, partner or someone else, this debt can be included in your Trust Deed.

However, be aware that the other party will still be liable for all of the debt. If you agree a reduced payment plan with the creditor, they can still chase the other named party for full payment

If you have a debt which is not in joint names but someone else is paying it your behalf, this debt must be included in your Trust Deed.

There is no reason why they cannot continue make payments to you towards the debt. However this would simply form part of your income calculation and would not be specifically attributed to paying that debt.

Personal guarantees

The one area where a debt may be included if it was not taken in your name is if you have given a personal guarantee that a third party loan will be paid. This often happens if you have been running a business and have had to guarantee a business loan.

If the debt you have guaranteed is called in, then you will be responsible for paying it as if you had taken it in your own name. As such, this debt should be included in a Trust Deed.

If you are considering a Trust Deed or other personal debt solution it is very important to understand which debts you should include and what will happen to any other debts which you are associated with but are not in your name.

Very often carrying out a Trust Deed will have implications on third party debts even if they can not specifically be included in the plan.

Trust Deed News Article Contributed By:

James Falla
Debt Consultant
www.beatmydebt.com

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