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UK Wide Debt Advice Charity
Call us at 0800 085 0226
E-mail: contact@debtsupporttrust.org.uk

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Can’t Pay Mortgage – Debt Worries

Many people contact Debt Support Trust because they can't pay their mortgage. This debt worry can cause people to ignore the problem and pretend it doesn't exist. When they eventually deal with the problem, the mortgage arrears have escalated or possibly repossession proceedings have begun.

There are plenty of reasons why somebody may be unable to repay their mortgage. The mortgage is a secured debt, meaning that failure to repay the money on time could result in the property being repossessed. If you would like help with your mortgage debt, please telephone our debt advice charity line on 0800 085 0226.

Reasons for Failing to Pay Mortgage

A mortgage is an important payment to make every month, it ensures you can remain in your property and repay the loan you borrowed. Rarely do people fail to pay their mortgage on purpose, usually it's because they are struggling financially.

mortgage-debt-problemsSome of the most common reasons for failing to make the contractual mortgage payments include:

Unemployment: A sudden spell of unemployment can mean that repaying the monthly mortgage payment is difficult. This is usually a short term problem but there is help and advice available so get in touch.

Overstretched financially: An over reliance on credit is the main reason for people being unable to repay their mortgage. Multiple credit cards, loans and overdrafts, coupled with the cost of the mortgage is just too expensive. There is support just calling 0800 085 0226 and speaking to a friendly advisor.

Please note that with priority expenditure, like a mortgage or council tax, this must be paid before credit cards and other unsecured debts. Our charity debt advice team can help you with your unsecured creditors so that you can afford to repay your priority debts.

Divorce/ Separation: When people separate or divorce the couple income remains the same, however the expenditure increases because people live in separate properties. This can mean the mortgage is unaffordable.

Increase in repayments: If the repayment amount each month is based on the interest rate, then a once affordable mortgage could become impossible to manage, because the interest rate has increased.

Advice on Mortgage Debts

By ignoring mortgage debt you will only make the situation worse. The sooner you realise a problem exists, it's important to speak to you mortgage company and explain the financial problems you face. The direct approach is always best. Your mortgage company can then help you with a payment holiday or move your mortgage to interest only for a short period. This can be expensive with fees and charges being included.

The Government's Mortgage Interest Scheme can help pay the interest on your mortgage for a short term period too. This usually lasts for a maximum of two years.

Debt Problems with Mortgage

When debt becomes a problem on secured credit agreements, like a mortgage, because of an over reliance on credit, then starting with a budget is best.

Write down all your income, like employment income, tax credits, pensions etc and then consider your expenditure. What do you spend on your mortgage, council tax, food, gas, electricity, insurances, telephones, car, transport, clothes, medical / dental or pets each month?

Next, consider how much money you are paying each month towards your unsecured debts, like credit cards, overdrafts, personal loans, store cards etc. If you're unable to pay your mortgage because you're paying unsecured credit, then you'll need to address this.

Your expenditure to live (including mortgage and council tax) should be paid first, before paying the credit cards. The reason may people give for paying the credit cards over their mortgage is because the credit card companies will call, write and text straight away, whereas the mortgage company will generally be more flexible. Unfortunately the mortgage company has a security over the property and as such they can repossess if you don't keep up to date with your repayments.

Get Advice on your Mortgage Debt

If you're unsure how to manage your unsecured debts and mortgage repayments, seek professional debt advice from a charity. A charity will consider your income, expenditure and debt repayments. You can then expect honest advice on how best to rectify your financial problems.

Debt Support Trust advisors are available to help by telephoning 0800 085 0226 or via email on contact@debtsupporttrust.org.uk.

Wednesday, October 23, 2013
Debt Support Trust
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PPI Reclaim and Debt Problems

Payment Protection Insurance (PPI) is being reclaimed across the UK. PPI which was mis-sold can be reclaimed and financial institutions must repay consumers if they are eligible. If you need help on how to reclaim mis-sold PPI please get in touch for advice. However, many people are also wondering what will happen with PPI in a debt solution.

In some debt solutions, assets must be reviewed to determine if there is any equity. PPI is considered as an asset. Most people don't expect they will have PPI so enter debt solutions without considering the implications.

Payment Protection Insurance and Debt Problems

In some debt solutions, all of the debt is not repaid in full. These solutions include an IVA, Trust Deed (Scotland) and bankruptcy. This means the creditors receive what they can back and agree to clear the rest of the debt.

If you have not entered an insolvency solution then you can apply for your own PPI. If you are due money back then creditors will often offset this money against any debts and give you the rest of the money back. This sometimes means you can repay a percentage of the money you owe.

If you are already in a debt solution, like an IVA, Trust Deed or Bankruptcy, then you will not be allowed to apply for your own PPI. If you do apply for your PPI and receive the money back then you would be required to repay this towards your debt solution before your solution is closed.

When Can My Debt Company Take My PPI?

When anybody enters an insolvency solution they sign over their estate to a regulated insolvency specialist. The specialist will then consider the assets to determine if there is equity. If there is realisable equity over a certain limit, then the asset will have to be sold.

In an IVA, Trust Deed or Bankruptcy it's procedure to check for PPI as it would become a windfall which could be returned to the creditors. The debt solution cannot be closed until the PPI has been resolved.  This process is managed by your insolvency specialist.

The same can be said for family inheritance or winning money, the windfall would go to the creditors to repay the debts. If there were to be money left over after repaying the debts and fees and charges, then you would receive this money back.

Tuesday, October 22, 2013
Debt Support Trust
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Debts Problems Feel Like I’m Giving Up

Asking for debt help is the first step in an important process of resolving debt problems. By contacting a debt advice charity, we can help you to find the debt solutions you are most applicable for. However, many people find the first step to be the hardest because of the feeling they're giving up.

In a survey at Debt Support Trust, two of the most popular responses people felt when dealing with unresolved debt problems was guilt and the feeling they were just "giving up". People often spend between 1 and 2 years trying to manage their debt problems before seeking debt help.

Debt Test Advice

Managing Debt Before Seeking Help

Our October survey found that in order to manage unaffordable credit commitments, people were

  1. Borrowing money from friends and family to afford the credit.
  2. Balance transferring debts to get the best deal. When the balance transfers were no longer possible they sought debt help.
  3. Negotiating with creditors to try and repay the debts.

The vast majority of people we helped told us they wanted to pay back their debt but felt like they were not able to do it on their own. Accepting help is not giving up, but taking responsible action to correct problematic debt worries.

Why Use a Debt Charity?

Sometimes a problem shared is a problem halved. Just by speaking to another person about your debt problems, you can often find that they can offer a different perspective on your debts.  Especially at Debt Support Trust, our debt advisors provide honest advice on all debt solutions so you have information about each route to become debt free.

You can ask us anything about being in debt and how to rectify your money problems. We will cover questions about your assets (like a house or car), your monthly repayments to your debts, your credit file, the length of your solution, any fees or charges the solution may include and information about your employment, among other questions you may have.

Take the First Step

When you're ready to get debt advice, our debt charity will be here to help. There's frequently a point when a person realises they can no longer manage the debts alone and that a debt solution may be required. That length of time will vary from person to person.

When you're ready to get debt advice, we'll be here. You can telephone our advice team on 0800 085 0226, email us at contact@debtsupporttrust.org.uk or complete our debt analyser below.

Debt Test Advice

Thursday, October 17, 2013
Debt Support Trust
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Debt Advice Service

The correct debt advice, whether it's bankruptcy, IVA or debt management is dependent on your personal and financial debt problem. The debt advice service available from Debt Support Trust may differ to other debt advice organisations.

We like to ensure you're not rushed into a decision on your debt solution. Your advisor will caringly listen to your financial problem and give honest and transparent advice. This enables you to decide which option is right for you.

Debt Test

Not for Profit Debt Advice Service

Debt-Advice-ServiceOur not for profit charity advisors will review your income and expenditure to understand:

  1. Your salary from any employment (or pensions)
  2. Your benefits including working tax credits, housing benefit and child tax credits, among others
  3. What expenditure you have every month, like rent/ mortgage, food, gas/ electricity and other monthly expenses, before you pay your credit agreements.

The next stage is to understand what credit agreements are in place and which companies you owe money to. Most people we help are able to live month to month, but are overstretched when it comes to repaying their credit agreements.

This means there isn't enough money to live and pay debts in full, but a debt advice service could help.

By using the available disposable income each month a debt solution could be applicable. The available disposable income is calculated by subtracting your expenditure from your income. The remaining amount is your disposable income.

Solution after Seeking Debt Advice

All debt advice services must use a set of budgetary guidelines to ensure food and other essential expenditure is within an appropriate range.

After reviewing the expenditure and understanding how much disposable income is available, then debt advice can be recommended. Debt advice services must also consider assets, like a house or car as equity may be required to be released in some debt solutions.

Some of the most popular options to resolve debts include:

Token payments: When you're disposable income is very small (e.g. £20 per month) but you anticipate your financial situation improving, then you could consider a token payment each month. This is typically the best option for people who are recently unemployed but expect to gain employment again shortly.

Debt management: The debt management plan is an informal debt solution. You make one payment towards your debts each month. Typically a debt management plan would be suitable for somebody with £6,000 and who could afford £200 towards their debt each month.  There's no guarantee interest and charges would be frozen, however if they were, the person would be debt free in 2.5 years.

IVA: A formal debt solution where interest and charges are frozen and written off at the end of the debt solution. One monthly payment is required, usually for 5 years, and any remaining debt is cleared at the end. Assets, like equity from a house or car will be considered at the end of the solution.

Trust Deed: A Protected Trust Deed offers Scottish people the chance to be debt free, in a fixed period of time. If the debt is not repaid at the end of the solution then it will be written off, along with interest and charges. Again, equity from assets will need to be taken into consideration.

Bankruptcy: A one year debt solution. There is a fee to enter bankruptcy which varies depending on the correct route. You may also have to pay money each month towards the bankruptcy for three years. At the end of the bankruptcy any debt which is not repaid is written off.

Debt Advice: The Service Provider

You have a choice over which service provider you choose to give you debt advice. Any debt solution above should come with a warning - your credit file will be impaired. This usually means a default is added and it lasts for 6 years.

If you would like help from our debt advice service team, then please call us on 0800 085 0226. This is a free call from a landline, however, if you're phoning from a mobile please let us know and we'll call you back to save your bill. Alternatively, you can email contact@debtsupporttrust.org.uk with your details and we'll be glad to call you back.

Our online debt analyser is available to offer online debt advice too.

analyseyourdebt

Tuesday, October 15, 2013
Debt Support Trust
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A Focus on Benefits

During a conversation with an indebted individual, we heard their story of being trapped in a debt cycle which they were powerless to avoid.

David was in his 50's and lived in a two bedroom flat. His son had moved into his own property and now his extra bedroom was no longer required. David had mental health problems and had been on benefits for many years. He wished to get back to work.

David's Predicament

David called Debt Support Trust to get benefit and debt help. He had fallen behind on his rent because he couldn't afford the additional 14% for having the second bedroom.

BedroomTaxWarDavid had requested a smaller property however there were none available. He asked for help to manage the arrears with his housing association and there was nothing they can do. David was getting the benefits he was entitled to but the cost of rent, gas, electricity and food left him short every month. Prior to receiving support for mental health problems, David was an engineer working for over 20 years.

For David, he felt like he was being left behind and isn't a valuable member of the community. When he spoke to a Debt Support Trust advisor, we sympathised with David's situation but there was little we could do to help. We reviewed David's income and expenditure to find cost savings, we ensured he was getting the correct benefits and gave him tips to deal with creditors. However, as David said, "this won't solve the fact I'm stuck in a property I can't afford".

David was correct. He's in a property which is too expensive so to compensate he has cut his food bill to below the breadline to survive.

David said "We spent £37 billion fighting a war in Afghanistan and we're trying to save £1.2 billion off the benefits bill. It doesn't make sense".

The Benefits Argument

Many disgruntled people on benefits explain their frustration to our money advice team. Most people we speak to wish to get back to employment, however they argue the opportunities don't exist. People who are on long term unemployment and wish to move into a smaller property are being told they can't because the properties aren't available.

Being stuck between a "rock and a hard place" is a difficult problem, which many people face. The Government doesn't appear to be making any U-turns in the near future, so we can expect an increase in people owing money to their landlord.

We need to separate the "can't pays" from the "won't pays". Debt Support Trust help the "can't pays" find a route to manage their debt problems. The majority of people we help want to improve their lives and don't want to accrue debts. Very few people we help are earning excessive amounts of benefit income while being capable of working. Most struggle to make ends meet and are currently accruing debts because of rent arrears.

Monday, October 14, 2013
Debt Support Trust
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5 Tips to Prepare for Christmas

It happens once a year and yet somehow we never really feel prepared. As Christmas approaches - there is only 75 days to go - we're encouraging people to get prepared so as the cost of the festive period is spread out across a couple of months.

Saving for Christmas doesn't have to be difficult, it can be fun! Here are some of our Christmas saving tips.

Savings Tips for Christmas

  1. Christmas Savings: You can save money on a weekly basis with the main supermarkets and their Christmas savings cards. By saving a little each time you're in the supermarket, you can buy presents or Christmas food.
  2. Secret Santa: Whether it's in work or with family and friends, why not consider a secret santa. Buying a present for everybody can be expensive, especially in a large office or family. A token, anonymous present so everybody receives one gift is often the best option.
  3. Buy Presents Now: You don't have to wait until the last week before Christmas to buy your presents. You can a couple of presents now and store them away. This means the cost of buying presents is spread out and more affordable.
  4. Christmas Dinner: The cost of the Christmas dinner can be expensive so purchase your crackers, food and alcohol in advance. Food which is not perishable can be purchased now.
  5. Planning: Organisation is the key to a successful and affordable Christmas. Whether it's buying presents and hunting around for the right present at the right price, or organising your transport in advance, planning is essential. You can save money on trains by booking in advance. When it comes to Christmas shopping, set a budget and stick to it ridgely.

Thrifty Savers

Most people are saving money for Christmas in Debt Support Trust. We'll be sharing our best money saving ideas on the run up to Christmas, so why not tell us how you're preparing for the festive holidays?

You can email us to tell us how you're preparing on contact@debtsupporttrust.org.uk.

Friday, October 11, 2013
Debt Support Trust
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What Happens If I Go Bankrupt

Entering bankruptcy is a popular route in the UK to deal with debt problems. The protection from creditors and resolution to the debt problem can be an attractive option to become debt free again. As a debt advice charity, it's our responsibility to ensure everybody we help is prepared for the debt solution they are about to enter. One question we're asked often is, what happens if I go bankrupt?

For quick debt help you can call Debt Support Trust on 0800 085 0226. You can also get more bankruptcy advice on our advice pages.

Becoming Bankrupt - What Happens to Me?

Bankruptcy lasts for one year and at the end of the year any remaining debt is written off and you are not legally required to pay the money back. This is true for bankruptcy across the UK. However, the implications of entering bankruptcy will vary from person to person. As a result, we've summarised some of the vital points you will want to consider before entering bankruptcy.

Debt Test

Your Job in a Bankruptcy

Before applying for your bankruptcy it's worth checking whether you are in employment. There are two reasons for this. The first is your contract of employment. Some employers don't allow employees to work for the company if they are an undischarged bankrupt or if they were made bankrupt in the last 6 years. This is often true for the financial services world. You should speak to your HR manager or check your contract of employment to be sure.

Secondly, in bankruptcy you can be asked to make a contribution towards your bankruptcy on a monthly basis. The amount you have to pay is determined by your bankruptcy supervisor. While bankruptcy lasts for 1 year, the payment order will last for 3 years. If you are working then another debt solution may be more applicable to you.

If you need help understanding the debt solutions available to you, or what happens if you go bankrupt, please call our debt advisors on 0800 085 0226 for confidential debt help.

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Bank account in Bankruptcy

After entering bankruptcy your creditors are notified and all of your accounts where the company is owed money will be frozen. So, for example, if you owe a bank money on a credit card then they would freeze all of your bank accounts, even your accounts which are in good standing, such as an overdraft account.

This means that prior to entering a bankruptcy you will need to apply for a new bank account, with a bank you don't owe money to, and transfer your income and direct debits. You can't open a bank account with a sister company of another bank you owe money to.

For help with your bank account and what will happen in bankruptcy to your bank accounts, please call 0800 085 0226.

Bankrupt: what about my credit file?

A bankruptcy will last on your credit file for 6 years and at the end of the period it will be removed. The default added will mean applying for credit will be difficult. During the period of the bankruptcy you should not apply for credit, however thereafter any application for finance will likely have a high interest repayment rate.

What Happens to my house in bankruptcy?

Your assets will be reviewed under bankruptcy. This includes your house, car and other assets like stocks, shares or bonds. If your asset has a realisable value then you could be asked to sell this for your creditors.

If you live in a mortgaged property which has equity after selling the property, then your bankruptcy supervisor will proceed to sell your property. They will take selling costs, fees and charges into account too.

If your assets do not have any realisable value then you will be allowed to keep these.

Get Bankruptcy Advice

Entering bankruptcy to resolve a debt solution is an important step. Before deciding to proceed with bankruptcy it's often advisable to speak to a debt expert to get their opinion. This means you can be sure you're making the right decision and be fully aware of what bankruptcy will mean for you.

You can call Debt Support Trust on 0800 085 0226 or why not complete our online debt analyser for online debt help.

Debt Test

Thursday, October 10, 2013
Debt Support Trust
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Credit Fix: Resolving Debts

To become debt free again is what anybody struggling to manage their credit agreements want. The freedom to know that debts are being, or have been, resolved is a weight of the shoulders. After resolving debts it's then about fixing your credit file and repairing any damage caused.

If you need help with your debt or credit questions, call Debt Support Trust on 0800 085 0226.

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Fix Debt Problems and Improve Credit Rating

If you fail to pay any of your contractual obligations then it could affect your credit file. In this instance a default would be added which would last for 6 years.

A large percentage of people we help at the debt charity ask about their credit file. Most often than not, their credit file has already been impacted because of the debt problems. When you enter a debt solution and include your unsecured debt to fix your credit problems, you're failing to maintain your financial agreement. This means your creditor can place a default onto your credit report.

Before you can improve your credit file you must resolve outstanding debt problems!

Credit fix: resolving your debts

Finding a route to resolve your debts takes an experienced debt advisor. Thankfully we have a knowledgeable debt team at Debt Support Trust that can help. Resolve your credit problems with our debt help.

You could be suitable for:

-          Token payments

-          Debt management

-          Debt arrangement scheme

-          IVA

-          Trust deed

-          Bankruptcy

To find out what debt solution you would be best suited to you should speak to one of our friendly debt team. You can telephone our charity debt advisors on 0800 085 0226.

Advice on getting debt free

Our debt help and credit fix support is available on a confidential basis. We do not share your information with anybody else. You can telephone for advice on 0800 085 0226 or email contact@debtsupporttrust.org.uk and we'll call you back.

The debt analyser can also help you with solutions to debt and takes about 5 - 10 minutes.

 

analyseyourdebt

Tuesday, October 08, 2013
Debt Support Trust
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In debt: help and advice

In debt Money AdviceIf debt is a problem for you and you're in debt to a point where you have no idea where to turn, then getting debt and money advice is essential.  Understanding your financial problem can give you the first step towards becoming debt free again.

You can get debt help by calling 0800 085 0226.

Debt Support Trust is a registered not for profit charity and our advice is completely confidential. The help we provide people in debt is designed to guide them towards potential debt solutions, but in the end it will always be your decision.

Where to seek help when In debt?

There are many places to seek debt help, including debt charities and for profit debt companies. We're explaining the differences so you can make an informed decision on how to progress.

Debt charities

Organisations which provide not for profit debt advice do so, usually, with grants and donations. There are two types of debt advice with charities, face to face or telephone.

Telephone: A telephone based charity will give you instant debt help. You can pick up the telephone at a suitable time for you and receive debt advice. The telephone advisor will be friendly and support you with every aspect of your debts. You can expect to receive complete debt advice within 15 - 25 mins, however this can be quicker depending on the complexity of your situation.

Face to face: You can also seek debt help face to face via a local money advisor. They would provide the same service as the telephone advice, but you would set up an appointment to meet and discuss your debt problems.

For profit companies: Other organisations providing debt advice do so with the intention of making a profit. This can sometimes mean there is a fee to pay for the advice.

Solutions to Debt

There are solutions to debt which meet every financial situation. You may even have two or three options to choose from. The solutions available when you're in debt depend on your personal and financial situation.

Debt solutions available include:

Debt management plans: An agreement to pay one monthly payment to one company who will manage your debt.

Debt arrangement schemes: A formal agreement to pay one monthly payment in Scotland and have all your interest and charges frozen.

IVAs: Usually a 5 year solution to repay what you can afford. Any remaining debt is written off.

Trust Deeds: A Scottish debt solution to repay what you can reasonably afford towards your debt each month. At the end of the solution any remaining debt, interest and charges is written off.

Bankruptcy: A debt solution which will last for one year, although you could be asked to pay into the solution for 3 years.

All of the above debt solutions have their own positives and negatives and these should be explained before you enter any debt solution.

In Debt Help

When you're in debt it's imperative that a debt advisor is both knowledgable and supportive. At Debt Support Trust our debt advice team care about getting you back out of debt. If you want help to resolve your debt problems and wish to speak to a telephone debt advice charity, then Debt Support Trust is here for you.

Call our advice charity now on 0800 085 0226 and we will help with honest and practical advice when in debt.

Monday, October 07, 2013
Debt Support Trust
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Changes to Payday Lending

From April 2014, the payday loan industry will be changing with tighter regulation to crack down on unscrupulous lenders. At present, the Office of Fair Trading regulates the finance industry, however from April 2014 this role will move to the Financial Conduct Authority (FCA).

Ahead of the change, the FCA has outlined what it expects from payday lenders and for many their business practice will have to change.

Changes to Payday Loans

Under new rules starting from April 2014, the FCA will expect all payday lenders to

  1. Only allow for a maximum of two role over periods. This is the number of times a loan can be taken out. For example, a £100 loan could be repaid at £125 on the following payday. If you couldn't afford the £125 this would "roll over" and the loan would continue but the level of debt would increase too. Some companies allow for continual roll over of loans so the debts continue to increase. The worst example we have experienced at Debt Support Trust was a £700 loan which turned into £12,000!
  2. Signpost people who roll over loans towards a free debt advice service. This will help people get impartial debt advice if they need it.
  3. Make risk warnings clearer on marketing materials.
  4. Stop payday lenders taking money unfairly out the banks of consumers.
  5. Conduct affordability checks for every single loan to ensure the person borrowing the money can in fact afford the loan.

It's understandable that the FCA would want to place restrictions on the short term loan industry as complaints about untrustworthy lenders grow. While many payday lenders may act ethically, many do not.  This is a concern when large numbers of people are using short term lending. Research from consumer group Which? shows that almost 1 million households take out a payday loan every month and that almost 40% are using the money for every day essentials such as food.

Payday Lending Criteria

It's fair to say that many payday lenders follow the above criteria already, so the changes being implemented will remove the unethical element of the payday loan industry.

MPs such as Stella Creasy have been campaigning vigorously for tighter regulation and the changes from the FCA certainly bring us closer to a fairer short term consumer credit market.

However, some people question whether it goes far enough or if more should be done to restrict payday lenders. The FCA said in response to the question, should the interest and charges to capped? "We will look at issues [relating to capping] once we take over in April", so there's scope for the FCA to go further with their power.

The changes are a welcome sign and greeted positively at the charity. Our charity already supports some payday lenders with their indebted clients and we will continue to work alongside the ethical short term lenders to support their business and providers money advice, where necessary, to people with payday loan debts.

Thursday, October 03, 2013
Debt Support Trust
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