Hi baxtersoop

Firstly welcome to the forum.

From the information, the Trust Deed may well be an option. I'm not sure the Debt Management Plan is the best option for you however looking at the information you have provided.

Generally you can look at 3 options in Scotland. Firstly DAS which will freeze inteerst and allow you to repay the debt over an extended period. At the figures provided, this would take approximately 10 years to repay.

The Trust Deed option would allow for a set 48 month agreement which would write off a percentage of the debt at the end. If accepted by creditors would stop legal action, freeze interest etc.

Finally sequestration (bankruptcy) which is a set 36 month period. You would require to maintain a contribution for the 36 months although you are discharged after 12 months.

If there are no assets and you have surplus income, then the main difference between each of these will be the time period. All will have an impact on your credit rating however.

Hopefully this helps a bit ( as a rough guide), but let me know if you have any other questions.

Mark

Thanks Mark for the quick reply.

Can you let me know the position with the house and how each would affect this as this is the biggest worry of my partner and I. Also can you let me know how the surplus is calculated.

Thanks

Mark, can I also ask if my partners car will be affected

Hi baxtersoop

Neither of the options should impact on the property as there is no equity from your information. The DAS option excludes property, however this would not really be a factor due to the negative equity position.

Neither option would have any effect on your partner's car.

Mark

Hi baxtersoop,

Well done on taking steps to try and deal with your financial situation. As we always tell people sometimes this can be the hardest step to take. The first thing I would say is try not to worry too much about your situation as from what you have described you have a number of options available to help you become debt free.

For someone living in Scotland I wouldn't advise a Debt Management Plan is a suitable option given that we have the Debt Arrangement Scheme, Trust Deed's and Sequestration. Did you speak with a Scottish company about your financial situation or was it someone based on England? I suspect as they haven't mentioned the other 3 options it will have been someone down south.

Mark has summed things up in terms of the three main options perfectly.

In terms of your property, a valuation would be obtained along with a redemption figure for your mortgage. Providing there is no equity then the property would not be at risk in a Trust Deed. This would also be the case in a Sequestration. No equity = no risk. This would all be done prior to signing anything.

A Trustee under a Trust Deed or Sequestration would need to confirm that the endowment policy is assigned to the mortgage company. In the past people have assumed that it is assigned when in fact it isn't. If it's not then the Trustee under a Trust Deed or Sequestration could look for your 50 share of the value of this if it's jointly held. Something to be mindful of.

In terms of the Debt Arrangement Scheme, this does not impact on any assets that someone has so your property would not be at risk under this option.

If all of the debt in in your sole name then your partner wouldn't need to consider any options and therefore her car would not be affected.

In terms of surplus, a household income and expenditure would be completed with you to establish the overall household financial position. It's from this that we can calculate the surplus and then we would consider a % split based on who brings in what income to the household. If for example you earned 60% of the household income then we would assume you cover 60% of the bills and then would have 60% of the surplus income available. It's from your share of the surplus income that a payment would be paid from. It's needs to be an affordable payment and something which is sustainable for you. A good advisor will work through this with you in detail.

We would always suggest speaking with a couple of advisors about your situation from different firms to find out exactly what options you have available and how these will work from firm to firm. You can do this in person or at their office.

Hi baxtersoop

Good for you in not just going along with the first option presented to you. Unfortunately we often see people who have been previously advised that a debt management plan is their best way forward and have ended up paying in for a lengthy period of time only to eventually find out about other options such as a Trust Deed or Sequestration much further down the line.
I think it is often in cases where someone is a homeowner and advisers think that these other options are not available, when in fact they may well be the most suitable route.

Is all of the debt just in your name, or is any joint with your partner or anyone else?

What are you basing the house valuation on? Any good insolvency firm, including those represented on this site, would get this done first before going any further with any insolvency option.

It does sound like a Trust Deed may be an option for you, but you need to get proper expert advice first, tailored to your individual circumstances. I, or indeed any of the other experts on this site, would be happy to oblige if you wish.

Thanks Mark

It looks as though the debt management plan suited the firm more than me from what's been said. The Trust Deed certainly seems to be the better option in terms of time period etc.

I'm going to speak with my other half this evening and will get back to you this week.

Many thanks again.

No problem, always glad to help.

Mark