Welcome to the trust deed forum mondayblues.

The usual trust deed term is three years. When a term longer than that is proposed I think the first question is "why?".

It might be necessary to ensure that creditors are offered an amount that they will accept. Alternatively it may be because the firm you are talking to want to charge above average levels of fees meaning that you have to stay in trust deeds longer.

Could you tell us how much debt each of you has?

Has there been any breakdown about how much each of your trust deed payments will be (out of the £350 total)?

Your budget needs to be sustainable, but will be restrictive to some extent so that creditors perceive that you are repaying what you reasonably can. It's not normally the case that you can elect to have lower contributions for a longer term, which makes ensuring your budget is manageable even more important.

Hiya and welcome.

Like TDA says, chuck down as much info as you can and one of the experts'll be along to give their opinion. 4 Years does seem long but it will pass quickly and you'll learn to budget in ways you couldn't imagine. There' loads of advice on here for all sorts of things.

Dont agree to a 4 year trust deed,contact another firm and see what they say.

Occasionally a longer td may be required but your level of debt isnt excessive enough to justify an extra year of payments,simply to line your chosen firms pockets!!!

Paul

Hi Mondayblues

A trust deed should only be for more than 3 years if it is necessary to get the contributions to the required levels, or if you are realising assets. Can you tell me if you own a house, and if so is there any equity in it? Do you own a car, and what's its value? If the answer to both of these questions is no, then you need to think again, as a 4 year trust deed may not be the best option. I would hate to think it was just to pay the IP's fees!! Feel free to ask the firm you're seeing why they are proposing 4 years, and if you are not happy, forget them.
On the question of contributions, it has to be sustainable as TDA said. You should have all necessary expenditure built in so you can manage. Remember together everything in writing before you sign anything!!

Thanks for the replies so far. I think I've got about 14k in my name, plus 9k in husbands name, and one joint loan of about £8,600. We were looking at a DAS initially and between the cccs, ndl and cab budget planners, they worked out between £160 and £300 available for creditors per month, dependant on their individual allowances for things. Our credit minimum repayments were amounting to about £750 per month, so the prospect of £350 initially is very appealing. However....with the lack of credit facilities to fall back on, we realise that the surplus to live off will still be hard on this strict budget. Based on £350 per month repayment, that leaves us with £780 pm for groceries (2 adults, 1 child and 1 dog) petrol around £140-£160, child's dance class, breakfast club etc etc £40 pm, car tax/mot etc, plus the usual presents, haircuts, etc etc. I want to ensure that we are doing the right thing and that the budget is sustainable, whilst also safeguarding our property. The das (on the repayments as outlined above) would run for minimum 8 years, realistically 10 years, plus the cab adviser said 5 years on top before could get any sort of credit (dont want credit as such, but do need mortgage, perhaps car loan eventually, and that's what put us on to trust deed, which hopefully would be well finished within these timescales????

Any help you could offer would be most appreciated,
Thanks,

Thanks so much for your opinions, it is all such a minefield. Four/six weeks ago we thought we were embarking on a das and were learning all about them,.... now only a few weeks later, we're learning the ins and outs of trust deeds!!!! Very confusing.

To answer your questions, we do own our home, it is mortgaged 140k outstanding. Current "open market value" approx £170/180k, trust deed valuation is coming in at 125k (forced sale valuation I believe, i.e. desktop). We own our car outright, only worth about 1.5k. Our house is our absolute concern in all of this!

Income for your info, is 1050pm for me, and 1216pm for husband, and 83 child benefit = 2351pm. I do get overtime almost every month, most months I opt to do around 6-8 hours and take home pay if I do o/t is around £1120. Sometimes husband gets overtime. He has been waiting on a payrise, which we are sure will happen - just dont know when, should be around 2k increase on his salary if he gets payrise.

Hi mondayblues

I think both options may well be viable. Looking at the information provided, the only real difference I can see is the time period.

The house is paramount to any decision, although this excluded in DAS. That said, from your I fo there appears to be no equity so it may not be an issue anyway.

Mark

Hi mondayblues.

There is a huge difference between the "open market value" and the "desktop valuation" values that you mention.

What's your gut-instinct about what the property would actually sell for?

Thanks Mark and Trust Deed Assistant, with regard to the property, I would estimate that in the current market to achieve a reasonably quick sale we would achieve 170ish, but to sell within normal time limits these days would be around 180k i would think. The company have organised a valuation (desktop with a company down south) and they came back at 125k! at a cost of £100 for this valuation.

I should also note that we are locked into fixed rate till 2018 and have 7k early redemption penalties - would that also be taken into consideration from equity point of view?

Hi mondayblues.

Have you been told that this desktop valuation will be the one that is actually used for your trust deed, or is this a valuation that is simply being used to give you an indication while you decide whether or not to proceed?

I have to say I feel a bit uneasy about the huge difference in the numbers here and would urge some caution until that side of things is all very clear.

TDA, think they said it would be used, and they get it done at the start of the trust deed so that there's no nasty surprises at the end, and that this is a defence security type thing. Said at worst then might need to pay £500 each (i.e. x 2)at the end if it is found that property has massively increased in value from the valuation done at the start!!

I too would urge caution on the subject of equity. If I were you I would insist that the valuation is done BEFORE you sign anything, as at present it sounds as if they are using an estimate which they intend to formalise after signing. A valuation based on a quick sale would normally be around 10% - 15% lower than a normal open-market valuation, but not usually 30% as in this case.

You wouldn't want to sign up and then be told that the valuation has come in at £150k after all and suddenly have a chunk of equity to pay.

Given that you are facing a 4-year period too, which may not be necessary, I would have thought a second opinion from another IP firm might not be a bad idea.

Thanks Kevin, so does that not mean that the valuation has been done already? How do I put it to the company that I need to satisfy myself about all these things, and that I don't necessarily trust them?! As I say we've already paid the £100 for the valuation. Had a few telephone discussions with the company, at length, and now moving on to next level which is meeting someone (different to person on the phone) is that the IP we're meeting? are they from a separate company, or same, or a sister company????