Hi dazza,

I think most people actually find the three years of living on a restricted budget while in a trust deed quite difficult but really appreciate not having the constant worry about the debt and the prospect of a fresh start three years later.

If the bank that your current account is with has a debt included in your Trust Deed you really must get a new bank account before the Trust Deed starts and see that your income is going into the new account.

Your question about having ?ú1000 in your bank account depends on where it came from. If you earned it at a level above that upon which your Trust Deed is based then a proportion will probably have to be handed over towards repaying your creditors.

Your situation will be reviewed annually during the Trust Deed. If you were to receive income increases above the level of inflation your monthly contribution would likely increase.

You can spend your money as you wish (holidays etc) but there will be a limited budget for leisure activities such as this in the income and expenditure statement used to work out your monthly Trust Deed contribution. This means you will probably need to cut back in other areas for this to be affordable.

I think if your advisor has deliberately portrayed a Trust Deed as being easy you have probably been "sold to" more than "advised". It isn't easy but in the right circumstances it can be absolutely the right thing to do once debts have got out of control.

Kevin and Mark, our two forum experts who are personally involved in working with clients seeking to enter Trust Deeds, have received great feedback from visitors to this site in the past. You might wish to contact one of them just to compare their advice with that which you have already received just to make sure you have all the information you need to make the best decision for yourself.

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Originally posted by Trust-Deed Assistant

Hi dazza,

I think most people actually find the three years of living on a restricted budget while in a trust deed quite difficult but really appreciate not having the constant worry about the debt and the prospect of a fresh start three years later.

If the bank that your current account is with has a debt included in your Trust Deed you really must get a new bank account before the Trust Deed starts and see that your income is going into the new account.

Your question about having ?ú1000 in your bank account depends on where it came from. If you earned it at a level above that upon which your Trust Deed is based then a proportion will probably have to be handed over towards repaying your creditors.

Your situation will be reviewed annually during the Trust Deed. If you were to receive income increases above the level of inflation your monthly contribution would likely increase.

You can spend your money as you wish (holidays etc) but there will be a limited budget for leisure activities such as this in the income and expenditure statement used to work out your monthly Trust Deed contribution. This means you will probably need to cut back in other areas for this to be affordable.

I think if your advisor has deliberately portrayed a Trust Deed as being easy you have probably been "sold to" more than "advised". It isn't easy but in the right circumstances it can be absolutely the right thing to do once debts have got out of control.

Kevin and Mark, our two forum experts who are personally involved in working with clients seeking to enter Trust Deeds, have received great feedback from visitors to this site in the past. You might wish to contact one of them just to compare their advice with that which you have already received just to make sure you have all the information you need to make the best decision for yourself.

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Originally posted by dazza

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Originally posted by Trust-Deed Assistant

Hi dazza,

I think most people actually find the three years of living on a restricted budget while in a trust deed quite difficult but really appreciate not having the constant worry about the debt and the prospect of a fresh start three years later.

If the bank that your current account is with has a debt included in your Trust Deed you really must get a new bank account before the Trust Deed starts and see that your income is going into the new account.

Your question about having ?ú1000 in your bank account depends on where it came from. If you earned it at a level above that upon which your Trust Deed is based then a proportion will probably have to be handed over towards repaying your creditors.

Your situation will be reviewed annually during the Trust Deed. If you were to receive income increases above the level of inflation your monthly contribution would likely increase.

You can spend your money as you wish (holidays etc) but there will be a limited budget for leisure activities such as this in the income and expenditure statement used to work out your monthly Trust Deed contribution. This means you will probably need to cut back in other areas for this to be affordable.

I think if your advisor has deliberately portrayed a Trust Deed as being easy you have probably been "sold to" more than "advised". It isn't easy but in the right circumstances it can be absolutely the right thing to do once debts have got out of control.

Kevin and Mark, our two forum experts who are personally involved in working with clients seeking to enter Trust Deeds, have received great feedback from visitors to this site in the past. You might wish to contact one of them just to compare their advice with that which you have already received just to make sure you have all the information you need to make the best decision for yourself.

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i really dont know what to do i phoned the company im dealing with and they said that the creditors normally ask for more money if im paying back like 200 a month, they said that thats why they try to pay as much as possible to stop crditors doing this. but i would hate to think that i worked a good bit of overtime to go on holiday they could put a stop to it. i dont think realistically i could pay back 42k but i thought when you signed up the creditors agreed a monthly figure and that was it. really confused thanks so much for your help. oh and also with going on whats been said if i managed to put some savings past which would be hard i know, could they take that to. thanks so much

The experts may correct me on this Dazza, but as far as I understand it - the idea of a Trust Deed and the mandate of your IP is to obtain as much of your "surplus" income as possible for the creditors. You're therefore not really supposed to have any spare cash available once all of your necessary living expenditure has been accounted for.

When my own TD was set up, my IP took down details of all my incomings and outgoings, and came up with a monthly budget on which I would live for the duration of the TD. The money left over after that budget represents the monthly payment that I make.

Irregular expenses such as clothes, pharmaceuticals, car repairs etc were worked into my budget so obviously I don't shell out for those every month. The reality of my own situation is that I basically have a couple of hundred quid left over each month after all of my regular expenses have been accounted for. From that, any irregular expenses (eg - clothes etc) are paid.

Personally, I find that money becomes tight towards the end of the month (in the run up to pay-day!), and I've had to gradually accept that living my pre-TD lifestyle is out of the question these days - the money is just not there. In the first few months of my TD I really struggled to adjust, but it's something I've got used to. As well as getting me out of debt, my TD is teaching me a very valuable lesson about the value of money!

I think that's a really frank post from imcville. It's extremely valuable to have the comments of a member of this forum who had personal experience in this area.

The Trustee has a responsibility to recover money for your creditors. That which cannot be recovered will be written off provided you meet the terms of the Trust Deed. In effect you are handing over control of your financial affairs and living on a reasonable but restricted budget in return for having a fixed point in the future at which you will be free of debt.

Dazza is right to say you agree to a fixed amount. This fixed amount however is based on the income you expect to earn. If you then go on to earn more it's only fair that some of this goes to the creditors who are owed money. Most (not all) firms will allow you to keep a percentage to provide an incentive to earn more.

If you have savings prior to entering a trust deed they would likely have to be handed in to help repay creditors. If you manage to live on a budget below the Trust Deed allowances during the Trust Deed then you are free to save. This is actually a really good idea as you will want to sae up for irregular expenditure such as clothes, car servicing etc jus like imcville says.

Dazza may decide he doesn't want to hand over control in this way; it isn't for everyone. Given the debt total however, and assuming all creditors agreed to freeze interest, an alternative debt management plan at ?ú400 per month might take around nine years to complete (a Trust Deed would be 3 years).

Hi Dazza,

Just thought I'd log on to say that the last couple of posts are spot on. The level of your contributions are not set in stone in a trust deed and have to be reviewed regularly. If you are consistently earning more money then it would have to be taken into account and your contributions may have to increase. However, if you are managing to put money aside by economising in other areas then this is to be applauded and you should be able to keep this money. Like the other posters said, it is a good thing to have a little money in the bank to cope with the unexpected expenses that crop up from time to time.

Of course, I can't speak for other insolvency practitioners, I imagine different IPs have different views...