Hi guys,

Was on the Stepchange debt remedy tool over the weekend and was working out income and expenditure. It asked me to do it for the household and at the end it recommended a DPP. But it used the figure for the total surplus income for the household, which included my wife's share.

As the debts are all in my name wouldn't the amount I could pay per month be my share of the surplus income, which is what seemed to be the case with a trust deed.

Thanks

Hi arab6767,

The problem with an electronic tool like that is as much as it is good for a budget it doesn’t have the years of experience than an Expert has both in terms of how thorough your budget is but also how things should work. Quite quickly on the space on a phone call an Expert would be able to re-assure you about things and give you specific advice on your options.

You are correct in that it’s not the full disposable income but your share of this that you would pay towards a plan be it a DAS (DPP), Trust Deed or Sequestration.

If you choose to pay the full household disposable income then you can do that and that could help to reduce the timescale of the DAS (DPP) to something that you are happy with. I always think it’s about striking a balance though as you still need to live.

What was your total household disposable income and what was the length of the plan? Also, how much do you calculate is your share of the disposable income?

I'd agree arab6767.

When you come to speak with an adviser I think you'll find most will focus on your fair share of the disposable income.

Hi David,

Thanks. It said the disposable income was just over £1100. My wife earns £35k and I earn £29k so would that mean my share is £498?

My £55k debt would take over 9 years to pay back. I'm resigned to the fact that this is the way it is tbh unless we can remortgage. Remortgaging would obviously be the preferred option.

Current mortgage outstanding is £98k and checked Zoopla and house is worth £177k. Not sure if our current provider would lend us £50k more. Did the Virgin affordability checker and it said no problem but I guess that depends on credit ratings. Mine might not be great although my wife will have an excellent credit score. We'll see what happens.

It might not necessarily be quite as precise as taking a "pro rata" split of that joint disposable income arab6767.

Each of you is likely to have individual costs (to be factored in individually) as well as your joint expenditure from which you both benefit.

However, as a ballpark figure, you're looking at this in the right sort of way.

Just another thought arab6767.

Most people, most of the time, are best advised to avoid formal debt solutions if there's another viable way to deal with the problem. There's a number of consequences associated with all of these options, not least the impact on your credit rating.

It's an interesting comparison here though between DAS and a remortgage. In an accepted DAS no interest is added. Obviously with a mortgage, interest is being added month after month over what's often a very extended period of time.

Increasing a mortgage substantially might eventually cost much more, and take a much longer time to clear the (now secured) debts, than DAS would have done. There's also the enhanced risk to your home in the future (with a larger mortgage) in the event that something went wrong and the repayments became a struggle.

So I think that many people would quite rationally agree with you and prefer to increase the mortgage if that were possible and affordable. But it can also be looked at in a different way in terms of costs and risks.

Thanks TDA,

That's why I was thinking a DPP would maybe be a better option and then transferring the mortgage and home to my wife when the current deal is at an end. I guess the maximum length of a DPP is 10 years? If we remortgaged it would be over 15 years, therefore the payments would be less per month however the total payable would be higher.

And then there is the matter of my credit rating. With a remortgage my credit rating could be built back up quite quickly I would guess.

So you'd probably want some confidence that your wife would be able to secure a large enough mortgage on her own in that case arab6767?

That's likely going to involve moving to a new mortgage lender, or at least qualifying for an entirely new mortgage from the existing lender.

Hi guys,

When organising a DAS is your budget as strict as with a Trust Deed?

For example, if my disposable income was £600 per month, is it possible to offer £500 payments per month? Going to speak to my OH this week so want to get it all options straight in mu head before I do. If the DAS budget isn't as strict I guess it would make day to day life a little easier compared to a trust deed.

Am I as well going to CAB to discuss and organise this, or speaking to David or Kevin directly? I'm a long way from Glasgow.

Hi arab6767.

It's going to be worked out in pretty much the same way. In both instances the creditors are being asked to provide concessions, so the expectation is that the person entering into the debt solution also makes some concessions in terms of their household budget.

It's entirely up to you from who you seek advice. I'm sure your local Citizens Advice do a wonderful job. Your local authority may employ a money advice team that you can access also. If going ahead with DAS is what you expect to happen, these services can provide it to you without you being charged.

David and Kevin have done an excellent job for many visitors to this site over the years. Both cover the whole of Scotland and you wouldn't be expected to travel to Glasgow. If you decided a trust deed was viable they could help you directly (rather than being referred elsewhere). They can also assist with DAS but, representing commercial entities, some of what you were paying into a DAS set-up by them would be taken in fees.

You also have the opportunity to contact a couple of different organisations for advice. This might give you a better feel for who you eventually want to entrust with such an important job.

Thanks TDA,

I had been searching the forum and found the following post and Kevin commented half way down about more flexibility in allowances for DAS. It was 4 years ago so not sure if things are the same.

https://www.trust-deed.co.uk/forum/topic.asp?topic_id=2286

I wondered because I would be paying a DAS a lot longer however maybe life would be a little easier. Sorry, should have posted link in my first question.

The "common financial tool" is now used to work these things out arab6767. You can read a little more here about this subject here:

https://www.trust-deed.co.uk/trust-deed-expenditure-guidelines.html

This tool was introduced to bring more consistency and fairness for people entering statutory debt solutions (and the same for their creditors).

Hi arab6767,

Like TDA has advised the CFT is now used across the three statutory debt solutions (Trust Deed, Sequestration and DAS). This is what we use when calculating your disposable income to establish what options you have available. As result there isn’t any more flexibility in one plan rather than the other.

Kevin and I cover the whole of Scotland and I actually spend a fair amount of time in the car doing home visits with clients. You can also pick up the phone to Kevin or I or even call your local citizens advice or local authority for advice on your options. You are investing a lot of time into researching all of your options with is the correct thing to do but at the same time, in the space of a 30 minute phone call I’m sure a good knowledgeable Expert could tell you exactly how things will work out rather than spend hours, days or weeks trying to research things yourself. You’re looking at posts from 4 years ago when the legislation has changed an awful lot since then and you need to be mindful of this.

The common financial tool which is used to work out a contribution to a bankruptcy or Trust Deed does apply to DAS too.

Having said that, there is nothing to stop you putting forward a proposal where your expenditure is higher than the guideline figures normally allowed in an insolvency procedure. As long as this is made clear on the proposals and all creditors accept this then it is fine and your DAS Debt Payment Programme would become approved automatically.

So in practical terms there can be more room for manoeuvre and as long as you are putting forward reasonable proposals (ie over a reasonable term) then there is every chance your DPP could be accepted despite your budget being loosened further than what would normally be allowed.

Hi Kevin,

Don't you have to prove expenditure with bank statements etc?

Working it out all surplus income works out at £1400 but then my share would probably be £650. However that would mean a big change to life at home. If I were to offer £500 per month over 110 months or £450 over 120 months does that seem like a reasonable term that creditors may accept?