Hi Louise, there are answers and solutions to all of your questions, your doing the right thing coming on here to get advice. An expert should be on in the morning to answer all of your queries. I was in a situation like you were, robbing Peter to pay Paul but had not defaulted. Getting a solution will be the best thing you do in a while, my only regret was not doing it sooner. Best of luck.

Thank you for replying DASdude. I’ve been reading through a lot of the posts on here and realise I am not as alone as i thought and that perhaps all is not lost.

Hi Louiseinedinburgh. You are asking all the right questions, which is a good start. I' not sure if it is comforting or not but the situation you describe of "robbing peter to pay paul" and increasing your debt each month is very common indeed amongst the clients I see. It's human nature to try and tread water for as long as possible and high debt totals is usually the result - which when you think about it is a least partially the fault of the lenders themselves too,

First of all, defaulting on your debts would very likely have no bearing on whether creditors would accept trust Deed proposals. If anything it can be helpful that the lenders see that you are struggling.

I wouldn't necessarily trust results of an online calculatorwhen it comes to how much you would have to pay each month. There is no substitute for going through your budget with an experienced professional, who will be able to give you a much clearer picture of what would be expected based on your circumstances.

Many people do continue to use a credit card for expenses purposes during a Trust Deed - there is certainly no rule against it, though you would need to be very careful that the balance gets paid off each month rather than building up and causing problems with you meeting your monthly Trust Deed payments. I would suggest that you might struggle to get a new credit card however, so this might only be an option if you have one already without any debt outstanding on it.

Cars are rarely problematic. Do you know what type of inance agreement you have, ie Hire Purchase/Conditional Sale/Fixed Sum Loan agreement? It would be dealt with slightly differently depending on which type it is, and there may have to be a string attached to your Trust Deed agreement in respect of it, but regardless of that I would not anticipate a significant problem at all with you being able to keep a car worth £6000 that is needed for work purposes.

Any of us experts on the forum would be very happy to take a closer look at your situation and provide advice to you directly, so please feel free to click the "contact" button to kickstart that process. We each work for insolvency practitioner firms that can set this up for you. It is worth stressing that it may not be your only viable option, so the various routes would be explained in order that you can make a properly informed decision.
Alternatively you could contact your local free advice agency to speak to a money adviser - though if it is a Trust Deed that you wish to enter then they would need to then pass you on to an insolvency practitioner firm at that point.

Welcome to the forum Louiseinedinburgh.

Unfortunately, the debt cycle you describe is common. While the payments are being made, they aren't truly affordable. The only way to stay on top of the payments is for your overall debt to increase, and this rate of increase accelerates over time. You're doing the right thing looking into how to break that cycle.

I don't think defaulting on your debts makes it more likely that a trust deed will be accepted by your creditors. If you decide to take advice and put a solution in place, your adviser will tell you when to stop making direct payments and fund the debt solution instead.

Most creditors use set criteria to decide whether to object to a trust deed or not. In most instances trust deeds do become protected, but if your proposals fall outside of those criteria a good adviser will be able to alert you to any particular risks of creditor objections.

A trust deed payment is based upon your disposable income. In simple terms, the adviser will subtract your household bills, plus reasonable allowances for other things you need, from your total income. The amount left over is paid into the debt solution. Your budget will be restricted during a trust deed, but you should be left with enough money to live reasonably.

A trust deed provider will allow you to keep a car on finance during the plan (so long as the payment isn't excessive). You'll receive an allowance to keep paying for the car. Most vehicle finance providers will allow you to keep the vehicle during a trust deed, but there are a few that will not. Speak to your adviser (when you choose one) about whether your finance provider is likely to allow you to keep the vehicle so long as the payments keep being made.

All debts that exist when your trust deed begins are automatically included. You wont be able to keep using a credit card that you owe money on. If you have a credit card with a zero balance, you could potentially keep and use it after your trust deed begins. For most people this is a pretty bad idea, but it's much less of an issue if it's strictly just used for work expenses that are promptly reclaimed.

We recommend the trust deed providers that are represented in this forum by Kevin, David, and Paul. Any of them would be very pleased to assist you if you got in touch with them.

Louise

Hope you well and hopefully this should answer the questions raised:

In terms of the trust deed, you are correct as creditors have the right to object to trust deeds. That doesn’t automatically mean the trust deed can’t achieve protected status. Creditors who object and have a third in value of the debt or a majority in number mean the trust deed will fail. Advisors can review your creditors and based on our experience, we can advise whether the trust deed is likely to be accepted or not.

A trust deed is just one option to deal with your debt.

In my experience, creditors don’t object on whether you have defaulted or not.

In terms of your monthly payment, we are required to use the Common Financial Tool published by the Money Advice Trust to work out a monthly payment. For a Trust Deed or Sequestration, all your disposable income must be paid as a monthly contribution. This is a legislative requirement.

A government Debt Payment Programme under the Debt Arrangement Scheme will provide you with more flexibility in what you want your monthly payment to be should you feel your monthly payment has been assessed too high.

It would be unlikely you would be able to keep a credit card under the three main solutions as most lenders take a proactive approach and usually freeze credit cards to prevent anyone getting further indebtedness.

In terms of the car, if your finance is hire purchase, PCP or conditional sale then as part of the trust deed, you will still be required to pay for the vehicle. If the car is a fixed loan agreement, then the car would be classed as an asset.

In order to provide a more detailed answer, would it be possible for you to advise what type of finance you have?

It would be good if you could speak to myself or any other expert on the forum to allow us to get some more information on your case. During the call, we would be able to provide you with information to allow you to consider the options available.

think we all posted at the same time

Looks like it , Paul. Always good to see that our answers are consistent when that happens though!

Hi louiseinedinburgh and welcome to the forum.

Looks like I’m a little late this morning… Some excellent advice from TDA, Kevin and Paul along with reassuring words from DASdude.

I just wanted to add that you have absolutely done the right thing reaching out for advice and help to deal with your debts. The positive thing is that like you will hopefully have realised by reading the posts above is that there is a solution that will help you deal with the debts that you have.

Often we hear about the impact that dealing with debt has on mental health, work life and also relationships. The part of the job I enjoy the most is being able to change someone’s life in the space of a phone call and when training new staff in my team I always remind them of that. We regularly hear from people on the forum that entering into a plan has changed their life. We want that to be the same for you.

As an advisor we can reassure you that we can help, that you can keep your car and that you can pay a more affordable payment per month over a realistic period. If it’s a Trust Deed then you’re looking at 4 years.

Take your time, do a little research and also have a look on the forum for the positive feedback about Trust Deed and also other debt solutions available. You will hopefully take some confidence from that and I’m positive that after a discussion with an expert you will feel a whole lot better. A plan can be set up pretty quickly and this can take a lot of the stress away from you.