Welcome to the forum 1985debt.

I can appreciate that this is a very important decision for you to get right.

So we can help to guide you could you please let us know a little more about the following things:

1 - What level of payment is being suggested by your advisers for a DAS or trust deed?

2 - Do you own any assets, such as a house or car for example?

3 - Could your employment be affected in any way by entering a debt solution?

Do you have any relevant personal preferences? For example, some people feel motivated to fully repay what they owe. Others feel more motivated to get out of debt as quickly as possible.

Hi the level of payment for Trust Deed is £355 and for DAS £329 over 8 years . I don’t own any assets. I work in the public sector and my employment would not be affected (two colleagues have recently entered debt programmes ) , What drove me into debt was a large reduction in my partners income , unexpected veterinary costs ,helping pay vehicle repair costs for my partner who is on a low wage and has his own debt . I feel that a DAS might have slightly less effect on my credit score and sounds more flexible ? I also owe money to a family member who assisted with a private medical treatment which was unsuccessful which I need to factor into my budget .

Hi 1985debt.

There's little doubt that DAS would be less impactful on your credit status in the short-term.

Whether this remains the same in the long-term is less certain.

Six years after you begin a trust deed it will no longer appear on your credit file at all. It will not impact your credit report or score.

Six years after you begin a DAS you'll still be in the DAS. It will remain on your credit file for many more years.

Have you had a discussion with any of the advisers about what can be done about the family debt?

Hi 1985debt and welcome to the forum.

First off well done on reaching out for help and advice to deal with the debts. This is normally the hardest step to take but once you do that we can help with a plan.

Is a payment of £300+ per month affordable? Have you went over a thorough budget with an experienced expert? You need to ensure that any payment you pay is affordable and sustainable for the duration of the plan.

A Trust Deed can be a very effective way to repay an affordable payment per month and write off an amount of debt you can’t afford to pay back. The benefit of the Trust Deed is that it’s only a 4 year period.

In terms of a DAS, you would be on this for over 8 years which is double the length of time compared to the Trust Deed.

You need to think seriously about the timescales involved between both plans and also the pros and cons. If as you say your partner is on a low wage doing something over 8 years could be a struggle. If you did a Trust Deed before you know it you will be almost coming to the end of it. People often say it’s the best thing that they have done to deal with their debts.

Try not to focus on repaying all of the debts as ultimately this won’t improve your credit rating any quicker. Focus on what’s important to you, that you can still have a life and do things. It’s about a balance and that’s always what I try to look at with clients as an Expert.

I think the best thing to do would be to reach out to an Expert for debt advice to look at all your options in detail. I along with the other Experts on the forum could help you with this. I know in the space of a 15-20 minute phone call we can give you a good idea on the options and put your mind at ease.

The budget for trust deed was one that I went over with an adviser however I felt that after doing it I was not given much time to think about my options . He said I would be classed as a high earner and that a payment of £353 was the lowest I could get my monthly payment reduced to.

There are guidelines as to how a monthly contribution payable to a trust Deed must be calculated. This can include some flexibility to account for individual circumstances where justifiable and should always be set at a level which is affordable. Are you confident that £355pm would be affordable?

In terms of DAS you can basically offer whatever you like, however the less you offer the longer a plan would take to complete as you are repaying your debts in full.

In your situation there is no right or wrong answer, it just boils down to what your priorities are. In other words is it more important to you to be clear of the debts as soon as possible, or to repay your debts in full?

You also need to think about whether your circumstances are likely to change significantly over he next 4 years, or indeed your partner's circumstances. The payments to a Trust Deed go up and down according to what you can afford, so if what you can afford is likely to increase substantially then you may feel a DAS is more appropriate after all.

Hi 1985debt,

Never ever feel rushed into doing a plan or going over a budget as this will only lead to problems and the wrong payment and plan being set up.

I’ve never heard of the “being classed as a high earner” reason is why you need to automatically pay more. The payment that you pay should always be based on affordability and naturally if you earn more you could have to pay more than someone for example that earns less but it should always be affordable. That’s why it’s key to get the budget right from the start.

Also the bigger payment per month you pay to a Trust Deed then the more fees that company will earn from the plan. This could be a reason for that advisor pushing up the payment.

You need to have time to think about things and go over a very thorough budget. I’ve been doing this a long time and know the types of things that people can forget to add into a budget. Things like haircuts, meals at work, clothing, Christmas/birthdays and also making a provision for things like car repairs. All important things but can be forgotten about.

Kevin makes some good point about changes in circumstances and it’s important to also think long term about this. Again this is where a good experienced Expert can really help.

It’s tricky for us to give you specific advice on the options, payment per month and also timescales without actually going over a thorough budget.

Which lenders do you owe money to? Reason I ask is some lenders can be tricky to deal with on a Trust Deed.

Don't worry the positive thing here is that you have options to help you freeze the interest and charges and give you one more affordable payment per month. It's just working out the best option for you now.

Hi I owe money to Nationwide ,Zopa ,Aqua are the biggest creditors . Another issue is that my wages are paid into my partners account as I had bad credit many years ago and a lot of utility bills etc like phone are in his name but it’s me who pays them , he has his own . The debt is in my name though so would that be looked on as ok for income and expenditure?

Hi I owe money to Nationwide ,Zopa ,Aqua are the biggest creditors . Another issue is that my wages are paid into my partners account as I had bad credit many years ago and a lot of utility bills etc like phone are in his name but it’s me who pays them , he has his own . The debt is in my name though so would that be looked on as ok for income and expenditure?

Hi,

If a lender(s) have 1/3 of the debt or a majority in number object to the Trust Deed then this can stop it from going ahead and becoming protected/accepted.

How much do you owe to Nationwide, Aqua and also Zopa?

Nationwide and Aqua can object to Trust Deed’s if the fees in which the company charge are above a certain amount. Also Zopa will object to a Trust Deed if they don’t receive a suitable amount back from it. They normally look for a 50% return after all fees and costs have been paid back.

In terms of your options, we looked at a Trust Deed, Debt Arrangement Scheme but you could also consider Sequestration if the Trust Deed were to be rejected. People are always very nervous about this as an option but based on what you have told us it could be as simple as a Trust Deed. The payment you pay per month would be the same as in the Trust Deed or maybe even a little bit less and it’s the same timescale, 4 years.

In terms of the bank account and having your income paid into your partners that isn’t an issue. When we do a budget ideally we try to do a household budget and then split this based on a % of who earns what. We need to collect bank statements to verify bills etc.

I owe nationwide £8600 Zopa £4300 and Aqua £4900. My preferred option is definitely a DAS

Hi 1985debt,

It’s good that Zopa only have 13% of your debt as on a Trust Deed even if they rejected it their balance is too small to cause a problem.

Nationwide and Aqua on those figures would be ok too so I’d be confident that as long as you can afford a suitable payment per month a Trust Deed could work.

Can I ask what is making you choose as a DAS over a shorter solution such as a Trust Deed?

If you entered into a Trust Deed potentially you would pay back £17,040 based on the £355 per month and you would write off £15,960. That’s a huge sum of money to save yourself and also you would move on with your life and start rebuilding quicker.

I’m not trying to point you towards the Trust Deed I just like people to think about all the options, the difference in terms of timescale and also importantly financially. Paying over £300 per month for 8+ years is a long time.

Are a Trust Deed and DAS equally bad for credit as I rent privately and would really worry that I would not be able to get a new tenancy if I had to move . Another thing is that if I were to inherit any money after the Trust Deed ended would this still be liable to go to creditors ?

Hi 1985debt,

Those are understandable concerns and good questions to ask.

In terms of your credit rating, on a Trust Deed all of the defaults will normally fall off 6 years from the date that they are added to your credit file.

From information shared on the forum as you come to the end of your Trust Deed you want to check the date of any defaults. If they are dated a good bit after the signing of the Trust Deed then you can write to the lender and ask them to back date the date of default to the start of the Trust Deed. If you do this then all the defaults will fall off 6 years from the start of the Trust Deed.

If you start to rebuild your credit file as you come to the end of the Trust Deed then 6 years from signing the Trust Deed only positive information will be on your credit file and it should be back up to being good. I have clients who enter Trust Deed’s 2 or 3 times and this shows that people can rebuild their credit rating pretty quickly after the 1st Trust Deed.

In a DAS, as you would be paying this for a period of 8+ years and therefore at the very this is how long your credit rating could be affected. It could take a little while longer after this for your credit rating to be repaired.

I’m not a credit rating expert but what I’ve learned is that under a Trust Deed it’s likely your credit rating would repair quicker than a DAS over 8 years.

I’ve not had anyone that I’ve dealt with in over 17 years that has run into problems being able to rent privately. Sometimes people can be asked for a guarantor but everyone I’ve dealt with has always been able to rent. The best thing to do is be honest and up front with a letting agent so they understand. In society nowadays a lot of people are in debt and have poor credit ratings and letting agents will be used to this.

After the Trust Deed has been successfully completed and when you receive your Form 5 certificate of discharge if after this you win the lottery or inherit an asset this cannot be taken from you and used to pay the debts. The money would be yours to keep.

If however you inherit an asset or win the lottery before you are discharged from the Trust Deed then this would be taken into it in order to repay more or all of your debts.

Is it likely that you could inherit an asset over the next 4 years?