Four years ago, you’d signed a legal agreement with your creditors for making monthly payments towards your debts as per your capacity. Today, you just finished repaying the last affordable debt installment to them. You’re waiting for the discharge letter from the Trustee. And your name will soon be erased from the Register of Insolvencies. Congratulations! You have successfully completed the term of the Trust Deed!
Take a deep breath and feel the free air. The lion’s share of your next wage need not be spent on repaying debts. But at the same time, be wary of your previous blunders. Stay more alert about not overspending and start laying stones little by little to rebuild your finances once again.
Here are a few pointers on the methodical approach towards regaining control over life after a Trust Deed. But before that, here’s a little piece of solution for those standing neck-deep in debts somewhere in Scotland. If you are still feeling helpless, get in touch with a Trustee as early as possible. An expert may show you a gleam of hope very soon. To find out your options to pay off your debts, Debt Free Life talks about Trust Deeds in Scotland to help you get rid of your debt once and for all.
Celebrate: This might sound a bit off place, but it’s important. The excruciating burden on your shoulders has been removed after years. You deserve to celebrate this new lightness before starting life from scratch. After slogging and taking so much of stress for the last four years of the Trust Deed, it’s time to take a small break. So, when you receive your next wage, keep aside an amount from it. Go on a weekend trip, buy tickets for a concert, or treat yourself at your favorite restro lounge in town. The rebuilding process is about to begin soon.
Wait with Patience: It’s understandable that you want to get the discharge letter in hand at the earliest. But the final clearance is bound to take some time. The unsettled ends of the Trust Deed will need to be stitched by your Insolvency Practitioner. The final payment of debt to the creditors must be confirmed. Paperwork related to the dismissal of your remaining debts needs to be sorted. All these will take some time. So don’t fret if you haven’t received your discharge paper as yet. As mentioned earlier, sit back, relax, and breathe in the newfound freedom. You shall have a lot of work to do after that.
Hone your Budgeting Skills: There’s no doubt that the last four years of a Trust Deed must have given you a valuable set of budgeting skills. Now, in an air of freedom, learn to hone those skills further. Do not get carried away by the newfound weightlessness. For the next few months, apart from spending a small sum on celebrations, you need to continue leading a life the way you’d been during the term of the Trust Deed. Direct the money you were hitherto spending on paying for the Trust Deed into a fund for emergencies. Remember that these first few months after the Trust Deed will decide the debt-free nature of your future.
Chart a Goal: Now that you are cleared off your debts, and have been slowly building your savings from the surplus income, you are ready to chalk out plans for future. Maybe you are longing for a boutique holiday. Maybe you wish to build a dream home. Or maybe you aspire to start your own business. Whatever be it, it’s important to dream. It’s crucial to chart a goal and start working on it step by step. Remember that your confidence might still be slippery following those years of debts. So, go slow and do your homework first. Make the fund calculations and start working out a detailed and reasonable plan towards achieving your goals.
Start Rebuilding your Credit: Let’s get more real. Rebuilding credit after a Trust Deed isn’t going to be a cakewalk. Your credit records will continue to carry references to the Trust Deed for the next six years. This will lead you to a few stumbles here and there. But don’t lose hope! Go about slowly but certainly in rebuilding your credit records. Remember that your present credit events will overlap the records of the past. Start taking opportunities to build positive credit events. In the due course of time, these positive events will superimpose upon your poor credit history.
Pay without fail your fines, penalties, compensation, or forfeiture orders imposed by any court, if any. If you’d taken a student loan, repay the loan in installments. If you are obliged to pay maintenance to your ex-spouse, make sure to do that without any lapse. If you have a mortgage or a secured loan, do not falter in making the payments on time. For every other debt that doesn’t come within the periphery of a Trust Deed, stay very particular about repaying them. All these will add to your financial credibility. But the question is how do you do it?
One practical way out would be to apply for credit building credit cards with very low monthly limits. The rate of interest for these cards is very high. But it shouldn’t bother much against the greater importance of rebuilding credit. Your second option is the prepaid card, a more convenient version of a credit card. Top up these cards with your own money in buying goods and services. The credit reference agencies will keep track of your regular payment clearings. This will build up a positive credit record.
Curb down the Overspending Tendencies: With the credit cards in hand, you must learn to stay off the temptation to overspend. While going for outings with family and friends, try to take only cash, and leave the credit cards at home. This will regulate your spending tendencies. Try to restrict the use of credit cards only to the monthly credit-building purchases. Whenever you are tempted to spend on things beyond the necessary needs, keep reminding yourself of those terrible debt-ridden days.