Hi Graeme

I’m sure the experts will be able to give you better advice than me, but I was in a very similar situation as yourself, and the debt level was exactly the same! I entered into a trust deed about 4 years ago, and although it’s a daunting thought it turned out to be a great decision for me. I have just made my final payment and you’ll be amazed how quickly it goes in! Everything you pay is based on what you can afford so be completely honest and you will be absolutely fine! I’m sure one of the advisors will give you better advice, they are really good on the forum!

I hope you manage to get it sorted and wish you all the best

Hi Graeme and welcome to the forum.

I'm sorry to hear that Covid-19 has disrupted your financial position in this way.

A trust deed may well be a good choice for you, but it's also worth considering the debt arrangement scheme and bankruptcy as well.

Each of these debt solutions work well for certain people and each has its own benefits and drawbacks.

Do you have a sense for how much you could pay towards your debts each month after you've allowed for all of your bills and other reasonable expenses?

Thank you, SD1991. That is very reassuring. I have had my head in the sand for far too long, pretending everything is ok, when, its obviously not.

You take care & stay safe.

Hi TDA (Amy), Thank you, so, much for the reply. Currently I'm paying about £1400 per month to just cover the minimum payments. I could pay around £600, which would leave me enough money to cover my other essential bills & spending.

Best, Graeme

Thanks for providing this information Graeme.

Payments into debt solutions are based upon an affordability calculation. Quite simply it's total income minus bills and reasonable expenses.

Bills pretty much are what they are. Other expenses are subject to expenditure allowances which the industy and creditors consider to be fair to people and to their creditors.

I'll provide some information about possible options, but this is based upon your £600 per month estimate. Once a debt adviser had run through your expenditure with you using the guidelines this £600 figure might be adjusted downwards or upwards (often downwards because occasional expenses sometimes get forgotten).

The Debt Arrangement Scheme provides legal protection from creditors and stops interest while you repay your debts in full. At £600 per month your debts would take around 4 years and 4 months to clear. DAS doesn't take into account assets you own now, or which might come into your possession during the plan. It's not insolvency, so would generally be seen as a less serious way to address your debts.

A trust deed runs for a minimum period of 4 years. You pay what you can afford, which could increase if your financial position improves. It's possible to pay more than you currently owe if your financial position improves during the plan (to help cover the admin costs and some interest for creditors). If you come into money or assets, your trustee will use them to clear more of your debt faster. This is personal insolvency.

A bankruptcy repayment plan (if affordable) will also last for four years. One difference from a trust deed is that if you become unable to make a payment at all (perhaps via redundancy for example) the arrangement will not become at risk. If you come into money or assets, your trustee will use them to clear more of your debt faster. This is personal insolvency.

If the £600 figure turns out to be correct, and there's a chance your income may recover in the next few years, you may well consider that the Debt Arrangement Scheme is a suitable way to deal with your debts.

If your disposable income turns out to be a bit less than £600 then a trust deed or bankruptcy may be more advantageous because it could get you out of debt sooner.

I'd suggest getting some advice so that you can begin to plan. We'd be happy to advise you directly, as will other local and national debt advice services.

Amy, thank you so, very much for this. The DAS option, sounds like the right one. I truly want to pay every penny back, it's just been a bit of a bad few years & with other things going on, I've let things get on top of me. My basic wage is around the £1700 per month, when I was getting the regular overtime/enhancements, it was usually £2100. If the overtime did come back, I'd would be more than happy to contribute more to the scheme each month. Being honest, the whole situation scares me. Just the messages of support & information on this forum, have given me hope again.

I'm glad to hear that you're feeling more positive Graeme. There's always a way to resolve a debt problem, but we know it doesn't feel that way when someone is struggling by from month to month.

DAS does seem like it could be a good option. If your income recovers it might be possible to clear your debts much sooner than would be the case with a trust deed or bankruptcy.

I agree that DAS does appear to be a good option for you, Graeme. The interest and charges are frozen on your debts, so you know that every penny you pay in is reducing your balance. I would definitely recommend going through your budget with an expert, whether by clicking through on this forum or by approaching another money advice agency. It's a fairly painless process I would say and you will feel a lot better afterwards.

Thank you, Kevin. I can honestly say - this forum has been a lifesaver!

Everyone's help & advice is greatly appreciated.
Best,
Graeme

If it is DAS you choose Graeme I can tell you it is a great solution. I was in a similar position to you a couple of years back, seeing the balance reduce every month in a DAS is a wonderful thing and learning to live within my means, wish I learned these skills at a young age to save. All the best.

Thank you, Dasdude. One of the team has been in touch & already I am feeling a lot better. a DAS, does sound like the ideal option. It's all my own stupid fault & I need to get my life back in check. Thanks for your very supportive reply - it means a lot. Graeme

Hi Graeme,

Delighted you have been in touch with an Expert and are getting the road started to becoming debt free. Don’t be too hard upon yourself I was like that also at the start, I soon realised how much creditors actually don’t care about you and help perpetuate the debt cycle. Yes I am paying back all my debt but equally if I had to go bankrupt tomorrow I wouldn’t give it a second thought what I owe the creditors and that I was not paying them back the full amount. We end up down paths in life with some excellent choices and really poor choices but we are emotional beings always learning, life is not straightforward and throws us curveballs on a regular basis, some more than others. This is probably the best thing you have done in a long time for yourself, enjoy the moment and budgeting from now onwards.

Thanks DASdude, I'm really hopeful that the DAS is a good idea. At the moment I'm earning £1700 per month - this did fluctuate upwards in the past with additional overtime, so, If that ever returned, I would be willing to pay more each month to clear the debt off. I have a strong suspicion though, that not only won't the overtime come back, but, my employer may decide to change our terms & conditions. This is why I came up with the £600 figure of repayment each month. I have moved back home with my elderly father as he is unwell & with my Mum in a care home, I'm paying some of the bills. We have just signed up to a Virgin media contract for our services which is £126 per month!. Unfortunatley, this can't be altered now & I'm a bit concerened that this looks to be overly exxcesive. Do you think they would be happy to accept the £600 per month offer, or should I think again? Any advice greatly appreciated.Graeme

When I applied for DAS I padded my budget out to make allowances for things I expected coming up such as a boiler replacement and other expensive maintenance. This was accepted as long as I gave an explanation but it did reduce my repayment which I will say is considerable already. You are already contracted to virgin now so that can’t be helped, it is a monthly payment unless you are within 14 days of commencing and can cancel it. I have learned to live frugally, or as cheap as possible allowing me to save so I can hopefully pay this DAS off much sooner, I spend a lot of times on forums and watching where I can increase income and reduce expenditure. I would definitely when Virgin is up look at cheaper alternatives if possible. I had one creditor out of several decline my DAS, this went to fair and reasonable test and the DAS was granted no problem. Try not to worry, the experts will be guiding you and will know what seems reasonable, if a DAS was not the way forward for whatever reason you still have options.