Welcome to the forum mill1980.

Can I ask how much you're currently paying into your debt management plan?

How much do you expect the affordable amount to change when your childcare costs change?

Obviously any payment to a trust deed would be based upon affordability. If it so happened that the amount of £240 is the amount that you can afford a trust deed may be possible, but likely over a term extended beyond the usual 3 year period. The precise extension will depend much upon the level of fees that your trustee proposes to charge.

As you have no assets bankruptcy would work in a very similar way to a trust deed. The difference is that payments, if deemed affordable, would be for a maximum of three years. Also you wouldn't have to aim for a certain level of monthly contribution to make the arrangement work.

Is there a particular reason why a trust deed appears to be a preferable option to you?

Hi there thanks for your reply.

Childcare will probably go down when the youngest goes to school my kids are 2 and 12 the oldest childcare will stop in august this year hence the extra amount I will have disposable.

I was paying £130 a month towards debts of 27k which included 20k from nram for the unsecured part of the together product and this after the review today has gone up to £170 with the inclusion of a total of 65k nram debt (secured & unsecured) which wasn't enough for trust deed, the advisor said at a minimum I would would estimate the need to be around £212 to be considered so was thinking if i could get it up to 230 to 250 that might be ok.

to be honest i am not sure I wanted to try and make some contribution back to pay my debts I want to get back on the credit ladder as I would look to buy a property in the future and I don't owe my current bank any money so would like to retain the bank account I have. Suppose those were the main reasons I thought trust deed would be better. would bankruptcy be a better option given the circumstances?

Hi mill1980

I dont think the DMP is a viable option and I think it is unlikely that a 36 month Trust Deed would be accepted at the contribution level suggested. The only alternative would be to increase the contribution amount or look to extend the period.

Sequestration may well provide a solution, although its difficult without a full review.

Mark

Hi mill1980.

The obvious problem with your current debt management plan is that it's going to take forever (and a day) to finish it.

If you'd like to move on from this high level of debt some form of personal insolvency seems to make sense.

Whether you enter a trust deed or bankruptcy you're going to be asked to pay what you can afford to pay for a period of time. That period of time may well be longer in a trust deed. It doesn't sound like you have much to lose from bankruptcy in comparison.

In terms of which is the better option it's tough to advise without having been through a full fact find with you directly. It does sound like bankruptcy is a real option in the circumstances though and worthy of consideration.

thanks for both replies and god yes I know in the long run the DMP isn't viable I am just using it as an interim position until I decide the way forward. 40 years I think the estimate completion was when I did my review today which is a shame because before the whole NRAM thing I was due to be debt free in 3 years I had brought it down from 13k to 7k in the last 4 years.

I suppose I just need to decide. I would probably consider an extended term for a trust deed if I could get one, and in a few months I could consider a slightly higher amount maybe closer to £300. Looking at it the benefit of a trust deed is that I wouldn't need to say when asked if I have ever been made bankrupt, and if I want to get another mortgage in the future it might help if I haven't. Think I will need to take some time to think about it.

Hi mill1980.

It may be worth talking it through with a couple of companies that handle trust deeds.

They also handle bankruptcies so could give you a meaningful comparison based upon their assessment of your circumstances.

yeah you are probably right I agonised for so long probably too long about whether to sell the flat in the first place I tried to look at every eventuality for dealing with the debt after it so have a far idea about the impact of both but maybe if someone talked me through both scenarios it might help. Stepchange said they could provide a couple of recommendations so do some phoning around, thanks again

Hi mill1980,

It sounds like you have been really struggling to do your best regarding your debts and the property and you are now at the point of having to consider either a Trust Deed or Sequestration in order to move on from your debts within a manageable timescale.

I note that you would lean towards considering a Trust Deed over a longer period of time to avoid having to declare that you have been through Bankruptcy. You need to balance this up against the possible timescale and payment required in order for the Trust Deed to be accepted by your creditors. You need to make sure that you don't over extend yourself when it comes to a monthly payment to your Trust Deed which is where a full and thorough review of your income and expenditure will help. You could consider a Trust Deed over 4 or 5 years whereas your Sequestration would only last for 36 months.

As TDA has advised, in a Sequestration your creditors are not required to accept the proposal therefore the monthly payment can sometimes be a little more manageable as we don't have to aim for minimum return to creditors. Sometimes individuals need to make some changes to their budget and lifestyle to be able to afford a payment which the creditors will accept.

I would suggest speaking with a number of firms regarding both a Trust Deed and a Sequestration. You want to ensure that whoever you speak with can fully advise you exactly how a Trust Deed will work and also exactly how a Sequestration will work. From this you will be in a better position to decide which firm you would like to proceed with and if it's a Trust Deed or Sequestration that you feel would be best suited to your circumstances.

thank you for your advice.

Yes I am really just in a position where i need to decide between the 2 options.

I spent last night thinking how would I manage my bank accounts if I went bankrupt as it really bothers me I would basically need to move everything from my current account with BOS to different accounts until I could open a basic account with another bank (I have no overdraft with BOS but I have a credit card debt included in the DMP for about £4000 i think so I presume they would freeze my account and then close it if I went bankrupt.

How do people actually cope with a frozan bank account I mean how can you buy food petrol etc if you cant access your wages? the money in my bank account is what I live on there is no surplus so I would be without any funds at all while the freeze was in place, my tax credits go in to this account weekly so I wouldn't even get access to those. I suppose I need more clarity on what this means because the bank account thing and having to state that I have been brankrupt before are really my biggest sticking points.

Its funny its not that I am even that bothered about having to go insolvent either way its more the taking away of my ability to manage my house and feed my family that is stressing me.

Also the thought of having to give up my life insurance policy bugs me, I spent about 6 months sorting it and have been paying in to it for 3 years so my child will be provided for if anything happens to be but by looking at it if I was made brankrupt I would have to give this up too.

these are just minor things but does really annoy me.

4 to 5 years is a long time you are right but I want to look at buying something else and to do that I need to move on fairly quickly from the current situation. then there will obviously be the up hill struggle to get a mortgage again etc but it is one I am prepared to take I will never put myself in the position I have done with credit and bad financial decision again and I am young enough I think to rebuild my financial position.

Hi mill1980,

I can understand all of your concerns in your post. It can be a very daunting prospect considering Sequestration. When I explain to people what my job is and my knowledge on Bankruptcy and debt they can't believe how different Bankruptcy is from what they first thought. This is the same for clients when they are advised on their options. It's that fear of the unknown that really can be one of the biggest issues people have. I'm asked all the time if people are going to come and take their household possessions away.

As you have debt with the BOS (your credit card) you would not be able to continue using this account if you proceeded with a Trust Deed or Sequestration. I would suggest opening up a new parachute account as soon as you can and then begin to arrange for the transfer of your wages, benefits and bills onto this new account.

From my experience dealing with a very large volume of Sequestration cases under our contact with the Accountant in Bankruptcy we had to implement a standard procedure for requesting a frozen bank account to be unfrozen. It was always HBOS Plc that frozen someone's account. What would happen is the client would try to withdraw money from their account and the machine would swallow the card. The client then went into their bank branch to find out the reasons why and were told it was down to the Sequestration. They were advised that HBOS Plc required a letter from us to confirm we had no objections to the client withdrawing the funds in the account. We would normally fax a letter within the same day and the account would be unfrozen with 24 hours. HBOS Plc would advise the client that they then had 30 days to move their banking facilities away from them following which the account would be closed.

If your account was frozen, generally within a day this can be lifted and you can have access to your money. It's not something that lasts indefinitely. There has been a lot of discussion on bank accounts recently on the forum and i think If you open an account with one of the suggested banks you shouldn't have a problem. You may feel better using one of the accounts which charge a monthly fee to use.

You wouldn't have to give up your life insurance. An allowance can be made for the payment of this within your budget. Do you know for certain than this does not have any surrender/cash in value?

If you have age on your side then you may be able to secure a mortgage in the future. A whole range of factors are taken into consideration when applying for a mortgage but unfortunately the Sequestration or trust Deed will have an impact on how quickly you are able to secure one.

Hi mill1980.

I don't think that a bank account need be a massive problem here.

Do you have any debts to Barclays? If not you could open one of their basic accounts which is available during bankruptcy/sequestration.

If you do have debts to Barclays you might look at one of the paid-for alternatives. There is some information about the thinkmoney and ClearCash options at:

https://www.trust-deed.co.uk/bank-accounts.html

I'm not saying that bankruptcy is the right option, just that keeping a perfectly functional banking facility during bankruptcy is certainly possible.

The biggest problem I've found with bankruptcy is people's perception of it. Yet if you strip it down, the process and end result is almost exactly the same.

The main difference is in sequestration (bankruptcy) creditors are given a statement of affairs and don't need to object/accept as opposed to the Trust Deed option. So there's no minimum dividend requirement.

Mark

thanks for all your replies they really are helpful.

Barclays would be the account I would go for I have no debt with them its just things i have read said that you must not open accounts before brankruptcy is granted at court as these will be frozen but if this is not the case then I am happy to consider opening one now and beginning to transfer my wages and DD over this wouldn't be hard for me to do. I was envisaging having to live with no bank account for weeks on end and the accountant in BR keeping all my cash and tax credits and me and the kids having nothing.

I have RBS accounts nothing in them but I don't owe RBS any money so was using them in the past to hold rent CT and other bill money so I didn't spend it before they were due and transfering the amount back to BOS account (one of the ways I helped myself to clear my overdraft) but i believe RBS because the situation they are in don't allow bankrupt customers to keep accounts open.

my life insurance has no cash value after its 40 year terms, if I do not die I get nothing back so i presume it has no cash in value to it.

yes i will have to work hard for a future mortgage but anything I get would be a joint mortgage with my sister she is looking to invest in property for her kids when they are older so suggested we get a joint mortgage on a property (she owns her own home out right and will have capacity to do this so I suppose I wouldn't be as great a risk as if I was a sole applicant so this might bode well for future plans too.

I have asked stepchange to forward me some contact details to have more discussions about both options. This forum is really helpful glad I posted now things are a bit clearer. thanks

I'm glad that the forum has been useful for you mill1980.

It makes sense to talk to a couple of insolvency practitioner firms that you have reason to trust to see what they have to say about your circumstances and options.