Can I do a Protected Trust Deed if I am self-employed

Being self-employed does not stop you from entering into a Protected Trust Deed.

Many people believe that you must be an employee of a company to qualify for a Protected Trust Deed, but that is simply untrue.

There no technical reasons that would stop a self-employed person from applying for a Protected Trust Deed, though there might be some practical ones.

One of the main things to consider when entering into a Protected Trust Deed, whether you are self-employed or not, is the affordability of the Trust Deed payments.

A Protected Trust Deed is a legally binding agreement, and there is a responsibility on the Trust Deed applicant to ensure that they will be able to maintain the repayment schedule laid out in the Trust Deed for the duration of the agreement.

It stands to reason that if you are an employee of a company, it is likely that you will have a steady income stream, and that your income will be consistent pretty much month after month.

However, anyone who has had the pleasure of being self-employed and running their own business will know that one of the downsides to being self-employed is, more often than not, an income which can be anything but consistent.

Never more so as when a self-employed income is seasonal, as is the case with people running privately owned hotels and holiday let cottages, or perhaps running a self-employed gardening business or landscapers.

For these types of self-employed businesses seasonal changes in their income are normal and to be expected but, nonetheless, cash flow can be extremely difficult to manage, even when turnover is good.

But on reflection, many self-employed individuals researching how a Protected Trust Deed might help them deal with their debt problem, recognise their financial difficulties have been brought about by such income swings, especially when an expected income has failed to materialise.

Indeed, many self-employed people will have used credit facilities to help them when their income showed signs of faltering, by using their credit cards as a type of financial ‘crutch’.

Therefore, in these situations, it is crucial that a Protected Trust Deed makes allowances for these seasonal swings, and adjustments need to be built in to the payment schedule of a Protected Trust Deed to allow for these swings in income where necessary. And, if necessary, the payments can be temporarily reduced or suspended.

And it is really important that any income swings are understood in advance, and then taken into account when the Trust Deed is being drafted.

Some self-employed incomes, of course, will not suffer so much with seasonal changes, and their Protected Trust Deed would be more akin to the typical Trust Deed payment schedule.

It is worth remembering at this point that all Protected Trust Deeds will be specifically tailored to needs of the individual self-employed Protected Trust Deed applicant and his business.

There are other issues can cause concern for the self-employed Trust Deed applicant, such as a tradesman being able to maintain credit facilities with suppliers. In such situations, it is acceptable to maintain a small manageable level of credit with a supplier, however, this line of credit would remain external to the Protected Trust Deed.

In this situation, it would be up to the self-employed individual to manage the repayments to his supplier, outside of the Protected Trust Deed and, if they failed to keep up with their repayments, the creditor would retain the right to take legal action against them to recover that debt.

If you are Self-Employed and would like to explore the possibility of entering into a Protected Trust Deed, then why not call our Trust Deed Helpline on 0800 088 7503.

All Trust Deed consultations are FREE and completely confidential and are designed to help you establish whether a Protected Trust Deed is a viable option for you to consider.