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Topic starter
01/11/2012 9:40 pm
Hi All,
I'm currently in a DAS which was set up for me by CARF at the start of the year and I've been paying since March. 9 years to pay off ~£27k.
Since then though my marriage has broken down and I've moved out of the family home. For most of the summer I've struggled to get by and finding a new place to live and furnishing it has left me with ~£3500 on a credit card which I know I shouldn't have done whilst in a DAS, but I was unconcerned with this at the time given the situation regarding my marriage breakdown (wife was pregnant to a guy she worked with). I've evened my keel now and I contacted CARF again to see if this debt could be added to my existing DAS, even with possibly slightly increased payments. On seeing my income/expenditure figures (I've got approx £300/month for food and day to day living expenses to cover me and 2 kids staying with me 12 nights out of 14) they suggested that I might be better off with a trust deed, and an appointment with Carrington Dean has been set up for Monday.
I've read plenty of posts on the forum and there's lots of good info, so I'm armed with questions already for this meeting but maybe you could help with anything I need to consider before a decision.
I'm already on a fairly minimal spend for things. I don't have a car, I don't have a TV subscription, I don't buy any newspapers or magazines, I don't smoke, I don't drink, I don't have any expensive hobbies. There's not really any place for me to make any more cuts in my outgoings. The only 'luxury' I've continued paying is £25/month into the CTF for my kids.
My ex wife (not divorced though) and I only bought our marital home last June. We technically have a 75% mortgage, however the other 25% was made up from 15% from the builders (new build) and 10% deposit from her mother. How would this "equity" be viewed? I'm not sure that the house will value at anything like what the buying price was going by recent sales in the area, but I can't say for sure. The 15% we owe the builders was over 10 years and rather than a fixed amount, it's 15% of what the valuation is at the point we want to pay it. The 10% from my mother-in-law was money she got from insurance when her husband was killed in an RTA. I don't want to stake any claim to that at all. My wife wants to keep the house and I'm happy for her to do that. If it wasn't for the money her mother put into it I think she'd have had no issue with me buying her share of the house and she'd move out, but as things stand I can't pay the £16,000 to her mother that it would take to do that. She seems to think that some magic form exists that I can sign and the house and mortgage will be signed over to her. I've tried to explain that the mortgage company are unlikely to agree to that given that she only has a part time income from working in a call centre. If my name was removed from the deeds somehow, would that remove any stake in the equity?
Also I have a property back in Ayrshire which I was unable to sell when I moved due to my job. I've switched the mortgage on it to interest only and rent it out to cover the mortgage, and associated bills (landlords' insurance, maintenance etc.) so I don't have any excess income from it. It's solely in my name as I owned it before I met my wife. I'm pretty sure there is no, or maybe even negative equity on it. I owe £98,500 on the mortgage, and I think the valuation may come in at ~£100,000 max.
My wife also has a property in Ayrhsire, only in her name but with a fair amount of equity (I don't know the figure). Again this was from her mother putting money into after her dad's death. I don't want any claim made on that, although I think that's unlikely anyway.
Any advice on things to look out for, or how my equity situation will be viewed would be gratefully received. Thanks.
D [8D]
01/11/2012 10:15 pm
Hi mathlete and welcome to the forum. I'm sorry to hear that you've had such a tough time of things recently.
In terms of your property and the jointly owned property:
I'd expect that each will be valued. If there is equity you'll be expected to pay it over (50% for the joint property) in addition to any monthly contributions. You cannot simply give away an asset to avoid it being taken into account by a trust deed firm shortly afterwards.
How much is it being suggested that you pay into a trust deed each month? Do you think that will be manageable for three years or longer?
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
Topic starter
01/11/2012 10:43 pm
I haven't had anything suggested other than that it might be an option for me to consider. My first meeting is on Monday afternoon. I currently pay £259/month to my DAS which was et up for 9 years. My original thought was that the £3645 I owe on credit card could be added to this and I'd increase my payments by £35/month so that it was paid of in the same time span, rather than paying £70-£80/month minimum payments and not even making a dent in it. The lady I've been dealing with at CARF phoned this morning to say that she thought a Trust Deed might be a better option and if it was ok to pass my number on to someone who could help with that. Minutes later I got a call from Carrington Dean.
I don't plan on giving away any assets to avoid a trust deed. This is just something my ex-wife has been suggesting since we split up. I've told her I don't even think it's possible for me to simply hand over the house as I had a similar situation years ago with a previous partner and I had to remortgage to 'buy' her half of the house I now rent out.
Despite everything that's happened I really don't want this to affect my ex wife in any way, and I especially don't want the deposit her mother paid for us to become an issue. I'm wary of doing anything that might endanger the house. I'm just not sure if the 25% that isn't mortgaged is equity or not, given that the builders of the home are 2nd charge on the mortgage to the tune of 15%, which has to be paid back in just under 9 years time.
If the value of the house is such that there's less than a few thousand equity taking into account the mortgage and the 2nd charge, does that mean it would be safe?
What would happen if my wife decides to sell at some point in the future?
01/11/2012 11:37 pm
I don't know about Carrington Dean, but I can at least let you know how we would deal with your situation.
A valuation would be done BEFORE you sign up to a trust deed (can be drive-by if necessary). This is very important to avoid any nasty surprises once it is too late.
The first £5000 of any equity would be ignored as it is not realisable (ie it would cost that much in fees/costs if you were selling the property anyway). Any remaining equity would be split in half if the property is jointly owned and this figure would have to be collected in on top of your 3 years contribution payments - either from a third party or by extending the term of your trust deed.
If your wife decided to sell whilst you are still in a trust deed then the sale would need to be agreed by your trustee too and your half share of any proceeds left once the secured debts are cleared would be likely to have to be paid in towards your trust deed.
Remember, there is no rush to sign up and you should make sure your queries are all answered satisfactorily first. There is nothing to stop you talking to more than one insolvency firm too and choosing that which you feel most comfortable with.
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
Topic starter
02/11/2012 8:48 am
Thanks TDA and KM.
Yes, that makes sense and I will look into other firms. I'm impressed with how open the advice is on here, and would probably like to hear from some of the recommended partners as well.
I understand the equity situation now. Can you confirm if the 15% 2nd charge on the property with the builders is considered equity or not? If it is then I very much doubt that TD is an option.
02/11/2012 9:20 am
Hi Mathlete ( great name)
All charges against the property need to be taken into account when assessing equity. If the have a 2nd charge over the property then this needs to be accounted for. I have a number of Trust Deed cases where the builders have a charge and it is treated like the mortgage as it is secured.
If you decide that the Trust Deed is the best option for you the it will take account of all debts under DAS as well as the credit card debt you mentioned.
It is wise to look at all options and also a realistic timescale before you decide what's best.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
02/11/2012 9:21 am
Hi Mathlete
Sorry, I meant to ask who CARF are?
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Topic starter
02/11/2012 10:56 am
Thanks Mark. Yes, I was aware the DAS would be superceded by the TD if I choose that option.
CARF is Citizens Advice and Rights Fife. CAB anywhere else.
