Welcome to the forum hajxel. I recognise that it must feel like a big first step to reach out for help, not least because of the effect that the debt is having on your personal lives. I'm sure many of our other members and readers will be able to personally associate with that.

I doubt you'll find anyone here to be judgmental; this is normally a very mutually supportive place.

The first thing to say is that, if your debt repayments have become unaffordable, there are several ways to go about tackling the situation. As well as protected trust deeds it will also be worthwhile to consider sequestration (bankruptcy) and the debt arrangement scheme (DAS). Which will be best for you will depend upon your precise circumstances and your attitudes towards a number of associated issues. A good debt adviser will be able to help you work through that side of things.

Scottish trust deeds and bankruptcy will take into account any assets that you own. That includes a home that has equity in it. It would appear that your home has little equity, if any at all after allowing a reasonable amount for selling costs. It therefore seems likely that your home would not be at risk provided you stuck to the terms of an arrangement.

The key point would be to ensure that a valuation is done ahead of becoming committed so that you know where you stand. This can then be backed up with a written confirmation about how any equity (if there was any at all) could be dealt with.

The debt arrangement scheme pays no regards to assets at all, so your home would be a non-issue provided you kept up the mortgage repayments.

I hope that this is a useful starting point. I'm sure others will offer further thoughts, information and support here in due course.

Hi hajxel and welcome to the forum.

You won't find anyone that will judge you on the forum. I'm sure you will find that everyone will be as supportive and as understanding as possible.

First thing is try not to worry too much. The hardest thing is to reach out and ask for advice. You do have solutions to help you deal with your debts and that's the positive thing.

In terms of your house, if you don't have any available equity then regardless of what option you proceed with then your house won't be at any risk. A Trust Deed and Sequestration take into consideration your property and in those plans the equity would need to be verified and confirmed at the outset prior to committing. A Debt Arrangement Scheme doesn't take into consideration any assets that someone has so your property/equity wouldn't be looked at.

Ideally you want to sit down with an advisor or two from different firms, discuss your full financial situation i.e. who your debts are with, go over a very thorough income and expenditure and also what assets you have and then you can discuss the available options and the pros and cons of these. Browse the forum, look at other peoples posts and their situation and what decision they made to deal with their debts. This should show you that there are far more people in a similar situation as you.

The most important thing is to take your time. Don't feel rushed into doing anything because your receiving pressure from your creditors. They will threaten all kinds of legal action and their collection letters can look quite intimidating but really it's just standard letters being sent out automatically. If you take your time and do a little research, speak with an advisor then you will begin to feel a whole lot better about your situation even although it may not feel like it at the moment.

Can you give us an idea of who your creditors are and the approx balances. Also, what do you feel you could pay per month to a plan after you have paid all of your essential living costs (not including debt repayments). Also, apart from the house do you have any other assets such as a car(s)?

Hi hajxel

The question on safeguarding the property is the most asked question by people and still the most important aspect in my opinion.

Looking at your valuation and mortgage redemption, it is unlikely that there will be any equity to deal with. If that's the case under the new guidance, then the position concerning equity would be agreed and set at the commencement if any trust deed proposal. If equity exists, then this is agreed and dealt with at the end. It is extremely rare for a a trustee to force the sale of a property and certainly it's not something I can remember in 26 years doing this.

The key thing is to look at the options and see what best suits. I note you mention that the debts are joint. Can you advise of the approximate split as it may be that other options may best suit.

The other key thing to remember is that the vast majority of creditors are dealt with by one of 2 companies in making the decision to agree a trust deed. As long as any proposal is within their criteria then they will accept the proposal.

I don't think anyone on the forum will judge you as everyone is here to assist. The key thing is getting the correct information and deciding what is the best decision for you both.

Mark

Hi Hajxel,

I think you're perhaps being a bit hard on yourself. I can understand how you may feel embarrassed, but at the end of the day, I doubt that you planned to put yourself in this situation. Its probably more of the case that things didn't quite work out as you'd hoped. That's what happened to me. What's important though, is that you do what you've done this morning. Try and deal with things. It may seem impossible, but taking the next step could take away all that stress in just a few weeks. If its any comfort, I strongly believe that you have come to the right place for assistance. The experts on this forum will help you with all your queries without any of the pressures that you may experience else where. The other users will usually offer their own experiences as well if you prefer to talk to them.

Good luck in moving on.

I think SkintAlly is right - you are being too hard on yourself.

Try not to worry - from what you have told us so far, I am certain that there is a way to sort this problem out for you. Exactly how it will work will depend upon the details of your circumstances and how the debts and income breaks down between the two of you, so the first port of call is arranging to go through all of this in more detail.

I guess it is only natural to feel embarrassed, however you are among friends and there are plenty of people here that will no doubt remember feeling exactly how you do right now, but can offer some insight into how much better their situations are now for having done something about it.

As for the experts, we see very many people with circumstances like yours, and I promise you we will all have seen many people in much deeper holes too, so there is no need to be embarrassed.

As the others have said, it seems that there is unlikely to be much equity in your home. Though it might seem strange o say it, this is a good thing when it comes to dealing with your unsecured debts as it means that there is effectively not an asset there that would have to be realised in an insolvency such as a Trust deed. We always get a valuation organised straightaway to put people's minds at rest on that score, as it is a hugely important thing to not have the threat of losing your home hanging over you.

Well done for facing up to it hajxel, I have no doubt that you ill soon feel a lot better for having done so.

Definitely no judging on here Hajxel. As mentioned this is a truly great forum for support and information. You have taken the 1st and important step in admitting you need help and getting your finances sorted. Certainly don't feel embarrassed about that at all.
Apart from the TD Experts on here every contributor will have been in financial difficulties at some point.

Your correct in wanting to know if your home is safe, it's a huge worry and that worry can be laid to rest before you commit to anything. Just take time to chose the correct firm and the correct path to go. The firms on here to get good press so perhaps start asking here.

Good luck, there will be a solution and you will come out better prepared for the future. I did.

Thanks for replies. The debt is split around 2/3 to me and a 1/3 to my wife. Creditors include major credit card companies.
We both have a car each. How do things like this work ref bank accounts. As regards paying per month with all living costs removed around £500 could be paid per month.
How does a debt arrangement scheme work. ?

Hi hajxel

The trust deeds are separate and if there are 2 cars, then these do not form part of the trust deed if the value is £3k or less for each vehicle.

It is always wise to open a new bank account as the vast majority of accounts are normally associated with one of the debts. Plus it gives a good clean starting point, that way you fully control what goes in and out if the account from day 1.

Looking at the figures, the trust deed may well be an option taking account of the surplus/level of debt etc, although this would be fully clarified. If the debts are all from major lenders, then as long as their minimum criteria is met, then the trust deed would be accepted. 99.9% in my experience go are accepted without any problems

The Debt Arrangement Scheme is a regulated agreement which stops interest, legal action etc similar to trust deed & sequestration, but allows you to repay the debt in full over an extended period of time. From the figures provided it would take approx 9 years to clear the debt. Trust Deeds are a set 48 months and sequestration is presently 36 months.

Mark

I hajxel,

Working through a very thorough income and expenditure with a qualified advisor will show what you can afford to pay per month to any plan. The budget needs to be realistic and take account of all of your expenditure. This is key to ensure that whatever plan you decide to proceed with it is sustainable and affordable for you.

It's always advisable to open fresh new bank accounts. That way you can avoid anyone trying to take any money from your account for debts which you might have with them. This is pretty straight forward to do. You can use any bank as long as you don't have debt with them. When you open a new account they will probably say that they will carry out a credit check against you but don't worry as in my experience this normally doesn't cause a problem. Once you have a new account open you can arrange for your income and any benefits to be paid into it and organise for your bills such as your mortgage, council tax, gas and electricity to be changed over.

In terms of the Debt Arrangement Scheme, it works on the basis that you repay your debts in full over however long it takes. The timescale is driven by how much you can afford to pay per month. The bigger payment you pay per month the quicker you will pay things off but you need to set it at a realistic amount which you can afford and sustain. To set this up your debt balances need to be verified with your creditors and once this happens a proposal is then released to the creditors and they then have a 21 day period to accept or reject the proposal. If one creditor rejects the proposal then the Accountant in Bankruptcy will carry out a fair and reasonable test. In my experience as long as your debts are being paid back within a 10 year period there shouldn't be any problems. Timescale for setting it all up I would say is anything around 6-8 weeks, sometimes quicker.

It's about balancing up the pros and cons of all your available options such as the DAS, Trust Deed or Sequestration. Factors to also consider are future changes in circumstances such as the children getting a little older which can result in things becoming more expensive, leaving school and moving into college or university and looking for financial support from parents. Also possible changes in income that this can bring about such as a reduction in benefits. This may not apply to you but it's all things that need to be considered if applicable. A good advisor should discuss things like this with you to ensure that you make the right decision on what plan to move forward with.

I think finally you need to be comfortable with everything that has been discussed, make sure that everything has been confirmed in writing but something that can be overlooked is you need to be comfortable with the advisor and firm that you use to set up a plan for you. After all your probably going to be dealing with them for anything from 3 years (Sequestration) to a possible 9 years (Debt Arrangement Scheme).

I should have said that Sequestration legislation is due to change on the 1st of April 2015 and the payment period increases from 3 years to a 4 year payment period. If this is an option that you are thinking about then you need to be mindful of this.

Hi hajxel

We have all probably managed to provide a crash course in options in Scotland and things are hopefully a little clearer as to at least what the options are.

There realistically are only 3 options in Scotland. DAS, Trust Deed & Sequestration and the best advice is to look at what option fits and fits both of you. This can only be fully looked at after a review of circumstances to assess the position with the cars, equity & level of contribution.

All firms work to a set form when assessing expenditure as laid down by the regulations. Don't worry though as it incorporates a lot of columns to take account of every eventuality. Once calculated, you'll know exactly the position.

Both the Trust Deed option and sequestration would require to look at the equity within the property, however DAS does not take account of the property as the debt is relax in full. However this would not be an issue if there's no equity.

The first step is always the hardest, however hopefully when thing are clearer and you know the pros and cons of each option, then you know what decision best suits you both.

Mark

Hi hajxel. Mark and David have summarised the options sufficiently already, but the other thing I would stress is that it is important to look at you and your wife's situation separately as well as a whole, because the best option for each of you may not necessarily be the same.

How are your wages split - do you earn a similar amount each month, or is one of you earning much more than the other?

call made...

Hi hajxel

This is normally the hardest step, but it's nowhere near as daunting as people thing. Once you are clear on what each option entails, the decision is usually far easier to make and the important thing is regaining control.

Mark

Thanks. Journey started