Keeping A Car While in a Trust Deed

10th October 2011

Many of us, irrespective of whether we’re using protected trust deeds or not, are totally reliant on being able to use a car. While a lucky few may have access to good public transport links that connect them to their place of work, shopping facilities or educational locations, many more find that their arrangements require access to a vehicle. Where debt becomes an issue and debt solutions such as a trust deed are considered, many people naturally worry whether they’ll retain access to a vehicle if they proceed with a trust deed.

A vehicle is of course as asset of value; in some cases of considerable value. If you own your car you may be worried that it will be taken from you and sold if you go ahead with a trust deed. This isn’t generally the case. A trust deed usually involves making a contribution from your income each month, a fact that requires you to be able to get to and from your workplace. Assuming that there is a reasonable need for the vehicle (which doesn’t only include commuting to work) you should be able to keep one even if you have a trust deed.

A trust deed will however mean that cars worth over £3000 will be considered to be an asset that can help to repay the creditors some of what is owed to them. If you sign a trust deed and your car is worth more than £3000 you will have an extra liability to the trust deed for this asset. You’ll need to work with the trust deed provider to decide how this will be dealt with. There are a few ways to handle this extra liability, including:

  • Extra contributions at the end of the trust deed
  • A payment from a third party
  • Downgrading the vehicle at the start of the trust

Each trust deed solution will mean that you keep a car, though there may have to be something of a compromise.

How about if you have a car that’s on hire purchase or a lease car while you’re in a trust deed? So long as there is a reasonable need for the car, and the monthly payment isn’t excessive (for an unnecessarily luxurious vehicle for example), the trust deed provider should allow you to keep the vehicle throughout the duration of your trust deed. The monthly payment for the lease or hire purchase will be included amongst your monthly expenditure that is used to work out your trust deed payment.

You should be aware that some lease or hire purchase contracts may include a clause that means they can take the car back if you become insolvent; unfortunately a trust deed is a form of personal insolvency. Most companies will not enforce this clause because of your trust deed so long as you keep the payments up, but a bit of advance research into how they’ll respond to a trust deed may provide some reassurance.

How about if you need a new car during your trust deed? This situation can be a little more tricky. If you plan to sell your vehicle and buy a new one you’ll want to get the go-ahead from your trust deed provider first. If someone else helps with the purchase of the new vehicle during your trust deed please remember that a car of increased value may be considered to be an acquired asset in your trust deed.

If you’re dealing with a trust deed and you’re looking to lease a new car or get one on hire purchase you may find that there are difficulties with credit scoring. There are some lenders that are open-minded about poor credit scores but this will generally be reflected in the interest rate charged. Some people are lucky enough to have a friend or family member who is prepared to obtain a hire purchase or lease vehicle on their behalf while they’re in a trust deed.

Some people would be well advised to take steps, in advance of signing a trust deed, that make them feel comfortable that they have access to a car that will see them through the trust deed without undue hassle or expense along the way.

To learn more about where you and your car stand whilst you are working through a trust deed, or for more information about living with a trust deed, visit www.trust-deed.co.uk now. Trust-Deed.co.uk contains a huge range of information about dealing with a trust deed, and can answer any trust deed questions you may have. They even have a trust deed forum where you can talk about your trust deed experiences with others who are in a similar position and trust deed experts. Our advice line is manned by professionally qualified debt advisers who will be able to help you with any trust deed questions you might have. Call today on 0800 043 7201.

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