Credit Card Debt And A Protected Trust Deed
If you have credit card debts that you are struggling to repay, a Scottish protected trust deed might be one option to consider. In this article we review the relationship between the high debts that can accrue on credit cards, whether credit card companies accept protected trust deed proposals, and how credit card debt may be written-off as part of such an arrangement.
In 2011 UK credit card providers wrote off a massive £3.64bn of credit card debt that they could not collect from customers. Incredibly, these figures represent a significant improvement over previous years. In 2010 the figure was £5.32bn and in 2009 £4.12bn. Average interest rates on credit cards currently stand at 17.3% which is higher than at any point during the last decade.
From these figures we can deduce a few different insights. Firstly, credit card companies have lent enormous amounts of money to people that weren’t in a position to repay it. Secondly, those that operate credit cards are well-used to debt write-off in such circumstances. Thirdly, extremely high interest rates are themselves likely to build up the level of debts that need to be written off and make the requirement for such write-offs all the more likely.
A formal debt solution such as a protected trust deed should be used as a last resort. It’s clear though that it is appropriate for more serious debt problems. One determinant of the severity of a debt problem is the overall level of unsecured debt. Protected trust deed advisers commonly work with clients that have seen their credit card balances escalate dramatically as the effect of the current high interest rates and charges kicks-in.
We know that credit card companies write off billions of pounds of debt each year, and a proportion of that is connected to the use of protected trust deeds in Scotland. As we stated previously, there is an understanding that not all credit card debt will be repaid and protected trust deeds are one of the major ways of establishing a repayment compromise between a credit card provider and their client.
In fact credit card providers (through their representatives) make clear to protected trust deed firms their acceptance criteria for the thousands of protected trust deed proposals they expect to receive each year. Such proposals are welcomed where it is in the best interests of the client and the credit card provider.
Anyone using a protected trust deed pays what they can reasonably afford towards their debts for an agreed term that is usually three years. They may also be required to pay over additional sums if they own certain assets. From these contributions the fees of the protected trust deed provider are paid and the remainder is distributed to the creditors (including any credit card companies).
It’s likely that the debts will not be fully repaid from these distributions, but after completing their protected trust deed any included unsecured unpaid debts will be written-off so that the client gains a fresh financial start.
If you are worried about credit card debt you may wish to visit our protected trust deed forum. In this forum experts can answer your trust deed Scotland questions to increase your insight into the processes involved. You may also wish to discuss your financial situation with our professionally qualified debt advisers. They can be contacted using the contact forms around this site or by calling 0800 0437201 or 0141 249 0416.
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