Does your equity cover the debts?

You really need to have a chat directly with an insolvency company or 3 to see what advice they offer(dont pay anyone to advise you though!!)

A remortgage during a trust deed may be difficult to achieve(due to the TD absolutely trashing your credit file for 6 years!!) and the only way to free up the equity may be to sell the property,so make sure you know what you are doing before you agree to anything.

I went with RSM Tenon who are represented on the forum,and have only nice things to say about them,but do contact a couple of firms as the advice may well vary,and only by speaking to a few will you get an idea of the best way forward,you are certainly not alone.

Paul

Welcome to the trust deed forum fedup58. Thank you for your kind words about the site.

Any creditor, consumer credit lenders or trade creditors, will typically take a commercial view on a trust deed.

As part of the process they will be presented with a summary of your financial position including details of your income, expenditure, debts and assets. They will therefore understand your capacity to repay them and can judge the trust deed on that basis.

The reality is that if a trust deed fails to become protected most people will judge that bankruptcy has become appropriate. Creditors of all types therefore need to weigh up whether a trust deed offers them a better commercial prospect than bankruptcy.

If you have equity you'll be required to use it to help repay your creditors. You might be able to release it by way of a mortgage, but for most people with significant levels of debt a remortgage of this type isn't any longer available. It almost 100% certainly will not be available once a trust deed is signed.

How much equity is there in your home?

How much do your debts amount to?

Are you now employed rather than self-employed?

Thank you Paul , its all a bit of a head spinner aint it , i`ve spoken to one advisor so far , i think he was more a recomender tho , he was a bit vauge about the equity tho which did start alarm bells ringing , anyway onwards and upwards eh !

Vagueness about equity is a pretty bad sign fedup58.

If you read around the forum you'll find plenty of examples that back this up sadly.

Thanks TDA ,

I`ve recently become employed 🙂 , i`m not sure on equity , that seems to vary considerably , i owe £ 100,000 on my mortgage , my lender reckons the house is valued at £ 140.000 that was a year or so ago, a quick online search valued my house at £ 165000 , i`m hopeing this is opmtimistic lol , my debts are around £50 ,your point on releasing equity is exactly what`s confusing me , my last bit of avice was that the equity would be sought by creditors after the 3year of the TD , but whats the chancesof geting a remortgage then , pretty slim i would have thought

sry that shoud be that my debts are £50000 , i should be so lucky eh

We haven't seen anyone on this forum for years who has been able to obtain an equity releasing mortgage prior to their discharge from a trust deed.

It's one of the types of mortgage lending that vanished in the aftermath of the credit crunch. Pre credit crunch it was often straightforward to get a 90% or 95% loan-to-value remortgage to release equity while in a trust deed. Nowadays a highly paid professional with no debts at all would struggle to get a 95% mortgage.

The way to look at it is not to focus too much on a remortgage alone. The money will have to be raised one way or another (family gift, additional contributions after a trust deed term finishes etc). If it cannot be, and significant equity exists, the home will almost certainly have to be sold.

I assume that retaining your home is a priority for you?

How much do you think you could realistically pay towards your debts (for example via a trust deed) each month?

without doing all the proper calculation , i would imagine i could pay somewhere around £ 400 maybe a bit more if the job pans out as promised

If retaining your home is important, and you are certain that significant equity exists, you might want to have a look at the debt arrangement scheme fedup58:

http://www.trust-deed.co.uk/debtarrangementscheme.php

Unlike a trust deed (or bankruptcy) your home would be excluded.

If set up and agreed it would provide you with legal protection from your creditors and guarantee that interest stopped so long as you stuck to the terms agreed.

It wouldn't be a quick fix though. Unlike a trust deed you have to repay the debts in full. £50000 at £400 per month is 125 months (around 10.5 years).

If that seems too long you might have to consider selling your home. I'd imagine that if you could repay £35000 or £40000 of your debts following the sale of your home you'd now be able to manage and repay the remainder?

It seems like one of those situations where there is no right or wrong answer. It really comes down to what your priorities are.

thank you TDA , i`ll have a look 🙂

Almost every advert you see for a TD tells you that you can keep your home, i suppose this is true in most cases but never a certainty , I do have equity , but not access to it , therefore its back to the old ways really aint it , kick them out :-0

Hi fedup58.

That type of advertising really ought to come with a warning as it simply doesn't apply to everyone.

The reality of trust deeds is that, if you have a fair bit of equity in your home, you shouldn't sign one unless you are clear in your mind how the money will be raised (or unless you are prepared to later sell the home to release the money).

As mentioned, I think the debt arrangement scheme is well worth looking into. Where there is lots of equity it can provide protection and certainty which wouldn't otherwise exist.

thank you for your time TDA , i`ll keep ypu updated

jc

Hi fedup58

We've just entered a PTD with the first payment made at the beginning of January. We too were worried about the house valuation and how we would release any equity. There was no way I could ask someone to pay into the pot and I really didn't want to sell. I'd foolishly gone on a house valuation website which threw out a figure of between £110,000 and £145,000 and I could have cried. I think I did actually [:(]

In the end, it was nothing like that! The house was valued by our IP free of charge. The figure is based on a 60 day sale, i.e. how much we could realistically get if we had to sell the house in a hurry. They then subtract the outstanding mortgage and about £3000 (for estate agent fees etc.) What's left is the equity which would need to be released. But this gets added to the end and your payments extended until it's paid. Ours was valued at £100,000 minus £95,500 mortgage = £4,500. Take off £3000 "fees" leaving equity of £1500.

I hope this helps put your mind at ease. It was one of the many things that kept me awake at night in the early days.

Hi fedup

While extending the trust deed in the case of Pammy1969 to realise the equity worked out for them you should bear in mind that if you have considerable equity then this might not be ok for you as I would imagine there's a limit to how long the trustee would allow the trust deed to run to realise the equity and they may not agree to it. So I would be very careful and be sure of the equity at the outset as TDA has advised
Best of luck