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Topic starter
05/06/2011 11:49 am
Hi
Firstly Id like to say that iv found this site to be very useful in my awareness and understanding of options available to address debt issues and iv found this forum very helpful
My current situation is that I owe approx £26,000 in unsecured debts, which I owe to 9 different credit and store cards (not good I know) I was managing to make regular on time payments to all these cards without any issues. However over the past 6 months minimum payments have increased, as has the general cost of living. This has meant that although I have managed to make minimum payments each most, there have been several occasions when payments have been made a day or 2 late. I'd like to note at this point that I have no arrears, late or missed payments on my mortgage or council tax which are paid each month as a priority.
I am now in a position where there minimum payments to these cards total £650 each month. I have a salary of £24k per year and monthly essential direct debits which total £950 per month. Without getting the calculator out you can see that it is now not physically possible for me to maintain paying even the minimum payments each month. I know this is not good, and I only have myself to blame for this mess as I have been ignoring this problem for the past year but using cards to pay for essentials and to make payments to other cards, robbing Peter to pay Paul and then borrowing that back for Sam !!
I have recently applied to several companies for a debt consolidation loan, but no-one is prepared to lend to me.
I have considered re-mortgaging. I have a mortgage of £52k on a flat which at this time is valued at £60K. So I don't have enough equity to cover the debt and due to minimum deposits for mortgages that again is not an option.
I am unsure as to what I should now do, and have been considering entering a trust deed. My main concerns as has been raised by many on this site is the issue of my property. I don't want to loos my flat.
What is the situation with equity on a property if I choose to enter a trust deed?
I have read that some ppl have had to release the equity in their home at the end of the deed. Would this be based on the valuation of the property when the deed was signed or would this be related to the value on completion of the deed? Also over the 3 years of the trust deed the equity of my flat should increase with payments being made, again would the equity being considered as it stands on signing the deed or on completion?
I'd also like to know what the situation usually is with paying fees. I've read on this site that fees can be between £2000 and £4500 for setting up and administering a trust deed. When and how would this fee need to be paid?
I know there's a lot of questions here, and appreciate any response. I'm trying to get a clear picture in my mind to make a decision about what to do, but I don't want to enter into something and get a shock at the end of it.
Thanks in advance for any help
Liz
05/06/2011 12:03 pm
Hello Liz and welcome.
Thanks for providing so much useful information.
We'll certainly be able to answer your questions about equity. In advance it would be useful if you could estimate how much you might be able to pay towards the debts, via a trust deed or other option, each month.
That will help us to make a comparison for you with some alternative options as well.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
05/06/2011 12:58 pm
thanks for the quick reply
without risking getting into further debt id be able to pay £250 per month
05/06/2011 8:53 pm
Hi Liz.
Sorry that it's taken a while to respond to you.
On the question of fees; trust deed fees are drawn from the contributions that are made into the trust deed itself (rather than having to find the money in addition).
It does look as though a trust deed would be available to you. There is a potential difficulty with the equity in your home though.
The experts here would advocate that a valuation is done on your home at the start of the trust deed to assess what equity is there. This should then be confirmed in writing and you would know where you stand at the end of the trust deed (rather than there being a further valuation). From what we read on the forum I'm not sure this is how it works at all trust deed firms though.
The valuations are often lower than people expect as they're based upon what the home could be sold for pretty quickly. However there does appear to be a chance that there would be some equity in your home. If it was only a couple of thousand pounds you could probably deal with it by making a few extra payments into the trust deed at the end of the usual term. Another option, if you're lucky enough, would be for a third party to pay in this sum for you.
If there were £8000 of equity that might be a bit more complicated unless someone would come up with the money for you.
An alternative is the Debt Arrangement Scheme which would ignore any equity in your home. Unlike a trust deed though there is no element of debt being written off (payments continue until the full debt is cleared). At £250 per month that might take around 8.5 years.
Hopefully this information is useful for you as you weigh things up. Please continue to ask questions if we can help further.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
05/06/2011 10:28 pm
Hi Both
TDA is correct, trust deed valuations tend to come in lower than normal valuation and this is then looked at against the redemption figure for the mortgage.
Best advice is to sit down with someone, look at all the options and ensure the property position is fully clarified before doing anything.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Topic starter
06/06/2011 8:21 pm
thank you both for your help and advice, its been very helpful
something else I was thinking about today, I have a car on HP which I have had for 18 months. I am aware that this would not be included within a trust deed, would there be any reason I would be made to hand the car back if I go ahead with a trust deed. I need my car for work. I work as a community nurse so its essential to my job to have a car.
Also if I decided to go for a Debt Arrangement Scheme, what is the impact on my credit rating. I know the trust deed effects this but im not sure about the situation with Debt Arrangement Scheme, and also what is the cost of setting one up?
Thanks again, this website has been really helpful.
06/06/2011 8:32 pm
Hi again lizmil.
So long as the HP payment is reasonable and you have a need for the vehicle starting a trust deed wouldn't mean you'd need to hand it back. I really don't think this would be any kind of issue for you and you'd be able to confirm this with the trust deed provider before going ahead anyway.
The Debt Arrangement Scheme can be entered without charge by contacting a DAS approved money adviser at your local CAB or perhaps Local Authority. DAS is also now offered on a commercial basis with three trust deed companies having employed DAS approved money advisers (including George White who is profiled on this site). If using this option the fees would be drawn from your contributions.
The Debt Arrangement Scheme will generally be detrimental to your credit rating unless it's already in a poor state. The impact will usually be less serious than would be the case for a trust deed, but if the scheme were to run for a long time this effect may also stay with you for longer than a trust deed would.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
Topic starter
06/06/2011 8:40 pm
thanks, thats been helpful
As things stand at the moment, I am swayed towards a trust deed, but then there is the difficult question of who do I go to for a trust deed?
06/06/2011 8:48 pm
Hi lizmil.
There are three companies featured on this site that we're happy to feature based on our knowledge of them and the experience of previous visitors to the site that have used them. We freely acknowledge that there are other very good professional trust deed companies out there as well.
It probably would not take too long to find the names of a few companies that crop up here in this forum regularly in a not especially positive way.
Your question might however be best answered by other visitors to the forum based on their own experiences...
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
07/06/2011 12:15 am
One small thing about your car hp, with a trust deed if your car is worth more than a certain amount it was £1000 and now I think £3000 by the end of the trust deed you may need to pay the excess, make sure if you decide to go with a trust deed everything is in writing so you know what to expect at the end.
g giles
