Also does any equity on the house have to be paid in full as part of the plan/end of the plan and what happens if the house value goes down? Also if you get a standard wage rise every year does this change payments?

Hi Well23 and welcome to the forum,

First off well done on reaching out for help and advice. I say it to everything but this is often the hardest step to take but once you do you will receive plenty of support and advice. If you have reached the point of the interest free periods ending then now is the right time to look for help.

You have provided a lot of useful information in your post which will help us give you some basic advice on the options available.

When it comes to looking at your options (Trust Deed, Debt Arrangement Scheme etc.) we need to go over a very thorough budget with you to see what you can afford to pay per month to a plan. This budget does include the fun things like christmas/birthdays, hobbies, kids clubs etc. I have two kids myself, 11 and 5 and therefore know what it’s like from a parents perspective. It’s about a balance and ensuring that without your budget you have enough money to live on and still enjoy life and do things as a family. Once we do that then whatever is left over is your surplus income and this is the full amount that is paid towards a plan.

We also need to establish the value of any assets that you have. If you have some equity in your property then we would need to carry out a valuation of this and then obtain a settlement figure for your mortgage. If you do have equity then in a Trust Deed a reasonable proportion of this needs to be paid over into it for the benefit of the creditors. In a Trust Deed the equity is agreed at the start of the plan and this is what it is fixed at providing you co-operate and make all of your payments to the Trust Deed. For a Trust Deed you can’t enter into it if you have more equity than debts. I find that people can often over value their equity so a Trust Deed could be an option for you.

If you do have too much equity then rather than a Trust Deed a Debt Arrangement Scheme could be an option. This has nothing to do with any assets that you have and is simply a repayment plan whereby the interest and charges are frozen and you make a monthly payment until the debts are paid off.

A Trust Deed should only have an impact on the person that enters into but sometimes if you are financially linked on your credit reports (joint mortgage, bank accounts etc.) then it could have a small impact on the other person although I can’t remember any clients flagging this as an issue.

With close to 60k of unsecured debts it could be a good idea for you both to look at your options and then decide if it’s best for both to enter a plan or just one person.

Regarding wages increases, should this happen during the period of a Trust Deed then a review would be carried out and it could be possible that your payment could increase. Before this happens we would go over an income and expenditure with you as along with a wage increase the cost of living will also increase.

Some questions from me now…

Do you have any debt with your bank i.e. a loan, credit card etc.? If you do then you would need to change your bank account. This is nice and easy to do and we can keep you right about all of this.

Also, who do you owe the money to along with the approximate balances? Some lenders in a Trust Deed cab be a little tricky to deal with.

The positive thing is that you do have options to deal with the debts and something could be set up prior to the festive period which could help to take away a lot of the pressure you are feeling.

Thanks so much for your reply, feel like ive already had some weight lifted. I dont owe anything to my bank, i have 2 mbna cards with approx 10300 combined, hsbc, 5200, barclaycard 4700, tesco card £2300. My loan is glasgow credit union with 6k left. I also have a car which is still on HP so i understand this will carry on as normal? What about any bonus' i get at work? Would i need to hand this over straight away? Talking approx £800 after tax once a year - not guarenteed though.

You are welcome! Glad to hear that you are feeling a little better already.

All those lenders we deal with on a regular basis. Glasgow Credit Union do like to object to Trust Deeds but their balance is too small to cause a problem and even if they did say no the Trust Deed would still go ahead and they would be included in it.

Bonuses and overtime are a tricky one. The Government changed the legislation to confirm that the full surplus income needs to be paid over into the Trust Deed for the benefit of the creditors. The problem that this creates is that with a bonus as this is extra income over and above the budget that has been set then this amount can be taken in full into the Trust Deed.

In their view once a budget it set with you then any extra money you get should be paid over into the plan for the creditors. It’s frustrating from an advisors perspective as until they changed the legislation we used to be flexible with bonuses as it was an incentive to work hard to receive it. That’s all changed now with the law unfortunately. We always review it with a client as sometimes unforeseen bills or costs can come up during a 4 or 5 year Trust Deed which could mean allowing a client to retain some of this. An example could be broken heating system, leaking roof, windows etc. Something that you can’t budget for but is essential and needs to be fixed asap. With no access to credit how else would a client pay for this.

How long does your car HP have to run?

The next step from here would be to reach out to an expert for some specific advice based on your circumstances. I along with the other experts on the forum would be happy to help you with this if you wanted.

I have 3 years left on my HP. I think the cars only worth 7k just now so doubt it will be worth much when the agreement ends. Thanks I am going to discuss all this with my husband and decide what to do.

As long as your car is worth less than £3,000 at the end of the finance agreement it’s fine and won’t be considered an asset.

The other issue could be in 3 years time you have the HP money that you were paying as spare cash. It’s hard to look that far down the line but it’s something that would be reviewed as and when it happens.

Is your husband aware of the debts that you have? I’d speak with him and find out exactly what debts he has too and then it would be easier for us to give you advice based on your household situation.

If he’s not aware of the debts then at least you can give him some options on how to deal with it all.

As I said before try to remain positive about it all. You’d be surprised how many people find themselves financially struggling. It’s now about focusing on what we need to do to help you get out of the debt and still have a life whilst doing it.

Ok thanks. Im glad i know the facts now, sometimes the worry of the unknown is far worse. Yes absolutely we are in it together, however based on everything you have said im thinking it might be better for him to get a trust deed rather than me. He has a salary of 26k. 12800k on a barclaycard, 13k on 3 mbna cards and 8k on a credit union loan which has 3 years left. Mine will be paid off in 18 months so id rather just get that paid off and gone myself.

Hi, when you say yours will be paid off on 18 months do you mean all of your debts or just the credit union loan?

You also need to take into consideration if your credit cards are coming to the end of their 0% interest each month you will pay a lot just to the interest and not reducing the balance. How much interest will you be paying in the next 18 months until you can pay more to them. A good experienced expert will work through all of this with you to look at all the options, not just a Trust Deed or Debt Arrangement Scheme but repayment timescales for the debts also.

Just my loan will be paid off. I know what your saying however I get bonus' and higher wage rises and will eventually get back to having the cards interest free over time if i make an effort to pay to them more. I dont think a trust deed for both of us would be the best option, not being able to obtain any form of credit (HP etc) as a family is a scary thought, life is unpredictable and i would feel more comfortable knowing one of our credit files isnt shot to pieces. My debt is more manageable if my husband had his debt sorted.

Welcome to the forum Well23.

I think one of the good things that would come out of getting direct advice would be fully understanding your capacity to repay your own debts while your husband is in a trust deed.

A detailed budget is created, which might give you extra reassurance that your plan will work and that your family will be able to manage financially.

Everyone always has the worry about accessing future credit and finance etc. and this is why a budget is key. For most clients they are able to complete a DAS or Trust Deed without any real issues or need for credit.

Have a chat with your husband and then you can always reach out for more advice. At least now you have an idea of your options.

Getting a debt solution was the best thing I ever did. In fact I wish I did it sooner! Losing access to credit after all those years of being reliant upon it was a scary place to be in but to have the relief of that one set affordable repayment every month and the debt reducing is fantastic, I could sleep easy again. You can live without credit, it's just about learning to budget and building an emergency fund, it is possible to have a life and get rid of your debts. The worry is carrying on still being reliant upon some form of credit and still ending up in a worse scenario further down the line, then you end up regretting not sorting it out sooner. Sometimes in life we have to take the scarier/uncomfortable option to sort out our problems, but in the long run it pays off. Good luck in your decision.

Thanks for sharing your experience DASdude. I think the forum works best when we combine real life experiences with expert advice and information.

These are big scary decisions. I’m sure we all wish Well23 the very best in finding an effective solution that they feel comfortable with (whatever that decision is).