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Considering a trust deed

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(@aber87)
Eminent Member
Joined: 13 years ago
Posts: 22
Topic starter  

Hi folks,

I have got myself into increasing debt over the past year since my mother (who lived with me) died. I have been trying to manage my debt unsuccessfully for some time and have actually made things worse through trying to gamble my way out of it. I now have unsecured debt of around £16k and I've finally faced up to the fact that what I am doing is madness and has to stop.

I have some questions;

1. Does the fact that gambling has caused a lot of my debt affect the likelihood of creditors accepting a trust deed proposal?

2. I have stupidly taken out a large payday loan recently, can it be included in a trust deed? If so how do I stop them from taking most of my salary before it goes towards the mortgage? If I cancelled my debit card, would that work?

3. My current mortagage is about £55k, the house was valued at around £85k about 18 months ago although there are now some problems such as the roof needing repaired and I can't afford to do that. How does the £30k equity affect my options regarding a trust deed or a different type of solution?

4. If I did proceed with a TD, what do I have to pay in the period between now and it being accepted? Do I still have to try and make some sort of monthly payment to my credit cards and loans because I can't afford the full amount?

5. I am on temporary promotion at work so my salary is currently £200 higher than normal. This is due to end in February when my salary will revert to its normal rate. I have documentation to prove that - will my trust deed be negotiated based on my normal salary because it will be unmanageable if not?

Sorry for so many questions on 1 post but when you finally take the plunge to sort out finances that have got into a real mess you just want all your questions answered at once.


   
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(@aber87)
Eminent Member
Joined: 13 years ago
Posts: 22
Topic starter  

Ok so I have been reading through the forum and it seems like a trust deed will not be an option given that the equity on my property is greater than my debts.

I'd happily sell the house but given that it needs work done to it I can't see me getting a quick sale, or even enough of a profit to clear my debts.

I'd happily re-mortgage but I'm not sure my bank will touch me and it's going to mean increased costs for another 10 years.

What are my options other than a trust deed then?


   
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TDA (Debt Adviser)
(@tda-debt-adviser)
Illustrious Member
Joined: 16 years ago
Posts: 13594
 

Hello aber87 and welcome.

Gambling need not be an issue, but a trustee would want to see that it had stopped for a period to demonstrate that it was under control.

Payday loans can be included in any debt solution.

You may need to speak with your bank if you do not want the payday loan repayment to be taken from you. I have heard that cancelling a debit card can work sometimes but it depends upon the circumstances involved.

If you have equity you'd need to know how you would release it if you signed a trust deed. If you couldn't raise the cash in any other way then selling the property might be required. If selling your property would release enough cash to repay the debts in full a trust deed might seem unnecessary anyway.

You'd normally stop paying creditors directly once a trust deed has been signed.

For any kind of debt arrangement you'd make the relevant parties aware in advance that your salary will reduce in a few months so that it can be factored in.

If you want to stay in your home and repay the debts at an affordable rate you might want to read about the debt arrangement scheme (DAS):

https://www.trust-deed.co.uk/debt-arrangement-scheme.html

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds


   
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Kevin Mapstone
(@kevin-mapstone)
Member Admin
Joined: 16 years ago
Posts: 4253
 

It may be possible to set up a Debt Arrangement Scheme payment plan on the basis that you are intending to sell your home and pay off the debt at that point. The benefit is that interest will be frozen in the meantime and you are protected from any action by creditors.

Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.


   
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(@aber87)
Eminent Member
Joined: 13 years ago
Posts: 22
Topic starter  

Kevin,

Is it not possible to set up a DAS scheme without having to sell the house at some point?


   
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(@candlewick)
Reputable Member
Joined: 13 years ago
Posts: 309
 

One of the benefits of DAS is that you DON'T have to include your property or other assets.

But a lot depends on how much you can afford to pay into a DAS, and how long it will run for. Right now, none of us have any idea about those things. Going to see a money adviser will help you sort that out.

If it turns out that the DAS would be longer than normal, or if a lot of your creditors objected to it, you can offer to sell an asset and put the money into the DAS - making it shorter, and maybe more likely to be accepted. But that's entirely up to you.

I think that's what Kevin's talking about here - a 'discretionary condition' - and it's something that you could discuss with your money adviser. As Kevin points out, the advantage of DAS is that interest is frozen, and you're protected from your creditors, while you're on it.


   
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Kevin Mapstone
(@kevin-mapstone)
Member Admin
Joined: 16 years ago
Posts: 4253
 

Yes, I wasn't meaning to imply that you would have to sell your home, and as Candlewick says, if you can afford to pay enough to repay your debts within a reasonable time then you wouldn't have to sell up. It was just that you had said that you would happily do so, which I took to read that you wanted to sell, though I guess I was reading too much into that!

Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.


   
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