Hi Hazel 71 and welcome to the forum.

Yes there is hope for you!

When looking at all of your options you need to ensure that you deal with a qualified expert and that they explain and explore all of your options. Your options could be a Trust Deed, Debt Arrangment Scheme or Sequestration.

The most important thing to do is ensure that you receive absolutely everything in writing regarding the payment per month, the plan timescale and also how any assets which you have will be affected. Trust Deeds can vary a little from firm to firm so it's always best speaking to a couple of advisors from different firms. Also, I would always encourage you to use a firm based in Scotland.

Can you tell us how much your debts currently are? Also, how much equity do you think you have in your property and so you have any other assets such as cars?

In a Trust Deed normally your house can be protected as long as your level of equity is less than your unsecured debts. The only way it could be at risk is for you not to maintain the mortgage or Trust Deed payment. Before you would sign a Trust Deed a valuation of your house should be carried out and a settlement figure on your mortgage obtained to calculate the equity. That way you know exactly how it will affect your house and this would be confirmed in writing.

In terms of the creditors rejecting it because you are up to date this isn't a factor. We work to a set criteria and in most cases the creditors will consider your payment per month, the return they will get at the end and your income and expenditure statement. The income and expenditure statement is the important part as this will determine what your payment will be per month so it needs to be thorough to ensure that you can afford to sustain a payment for the full duration.

A good knowledgable expert advisor will be able to give you your options and reassure you about how things will work. Kevin or I would be happy to give you some advice regarding this.

The positive thing to remember is that you have solutions to deal with your debts and to could be potentially debt free in either 4 or 5 years depending on your circumstances.

Is there anything else that you might be worried about?

Thank you for your reply david. Debt is 30k over credit and store cards. They are all in my name. Do TD,s need to be in joint names if a joint mortgage with my husband.? He has around 7k on credit cards. We have a car worth around 5k which is needed for work. Equity in house is approx 100k hence the reason we have been trying to remortgage - twice in the last year but our own bank of over 25 years can't help (computer said no and even the man at bank was frustrated) The monthly payments we pay to debt would easily pay the extra mortgage. Selling the house isn't an option as we can't get another mortgage and we have 2 dependant children. . Situation has arisen due to redundancy in the past and now that we are getting back on track and settled in new jobs we can't get on top of the debt as all our pay goes on bills and debt repayments each month. We have contacted trust deed scotland for advice and are meeting with a lady next week. Just desperate for as much advice and info as possible. Thank you.

Hi Hazel

Could your mortgage be transferred to a smaller / different house so you keep the mortgage you have a release money through moving to a smaller house?

My friend just moved for a very similar situation Her mortgage was ported across and she released money from the sale to clear her debts.

Just a thought.

Hi Hazel71,

Have you considered speaking with an Independent Financial Advisor about re-mortgaging your house? If you use a bank for this they will only tell you about their own products and not others on the market. A good IFA will explore all of your options and with approx. £100,000 of equity they may be able to do something for you. It's worthwhile looking into.

A Trust Deed is an individual arrangement so you would either enter into your own 1 or you could and your husband wouldn't.

When it comes to that level of equity a Trust Deed needs to be something which you seriously consider the pros and cons of. Under a Trust Deed you effectively transfer any assets which you have over to a Trustee to deal with. A proposal is then made to all of your creditors and if they accept it then your Trust Deed becomes protected. Within that proposal the Trustee needs to confirm the level of equity in your property and how much of this they will ingather for the benefit of creditors. This could be a factor in if the creditors will accept or reject the proposal.

Also, if during your Trust Deed you are unable to maintain the payments or there is a change in circumstances then it could seriously put your property at risk of being sold. If you have a property with equity then in a Trust Deed you normally extend your payments for 1 additional year to pay over a proportion of this making it a 5 year arrangement.

The test for my organisation when putting someone onto a Trust Deed is if they are ÔÇ£apparently insolventÔÇØ which effectively means your assets are not enough to pay back your debts. In your case your assets are potentially enough.

Another plan which you could consider that would not involve your property at all is a Debt Arrangement Scheme. This is a repayment plan whereby you make a monthly payment until your debts are repaid in full. If for example your total debts are £37,000 and you can pay £500 per month that plan would last approx. 6.1 years. This plan would be just over 1 year longer but would have nothing to do with your property.

You want to ensure that when you speak with the advisor this week that they outline exactly how a Trust Deed works regarding the equity and the risk to your property. You also want to ensure that they tell you about the Debt Arrangement Scheme. You also want to ask if Trust Deed Scotland will actually handle your Trust Deed themselves or if they will pass you to another organisation to set up your Trust Deed and run with it.

I wouldn't rush into anything. I would gather as much information as possible from speaking to a couple of IFA's, meeting with the person about the Trust Deed but also asking what your other alternative options are as like I said, a Debt Arrangement Scheme will not impact your property and then decide which option best suits your circumstances. If you do that then whichever option you pick you know you have done your homework.

Hi Hazel71

You are right to be cautious with that level of equity in your property, even if it is joint.

I think the term David meant to use was "absolute insolvency" (apparent insolvency is a technical term which applies when someone meets one of the conditions to apply for bankruptcy). Absolute insolvency is when you own more than you owe and could pay off your debts in full if the assets are sold. If this is the case, and it sounds like it probably is based on the amount of equity in your property, then my understanding is that a Protected Trust Deed would not be an option for you as the Accountant in Bankruptcy would be likely to refuse to register the Trust Deed as protected.

Like David said, maybe try and explore the remortgage option further with a whole-of-market mortgage broker. Otherwise, the Debt Arrangement Scheme may be the most appropriate route for you, assuming you can afford enough to repay your debts within a reasonable timescale.

Hi Hazel - please be very careful for a number of reasons:

A. Trust Deed Scotland. The clue is in the name of the company. They get paid if you sign a Trust Deed. And then a company in Manchester will administer it with no involvement from Trust Deed Scotland whatsoever. They are just a 'middleman' who I suspect have an ulterior motive to see you sign a trust deed. Although they claim to give advice on all options, their very name should be enough to help you suspect what they will recommend, in my opinion (let's face it, if you go to greggs and say you're hungry, they are unlikely to suggest you eat an apple when they could sell you a doughnut, even though an apple would be much better for you... They don't get paid for selling you apples...) You would be much better getting advice from someone that has both knowledge (correct) and experience of actually implementing all the options available to you. Make sure it's someone based in Scotland and not a middleman.

B. They are recommending you sign a trust deed when you have £100,000 of equity in your property. I'm guessing that's 100,000 of equity in total, so that's 50,000 for each of you.
Be extremely careful of anyone who suggests you sign a trust deed and just pay an extra year of payments instead of the actual amount of equity (which David suggests is now the 'normal' approach - I'm sorry David, that's nonsense. It's not the 'normal' approach, it's the approach which some companies are currently taking and is, in my opinion, very bad advice and unnecessarily putting people's properties at risk if they have a change in circumstances)

C. Kevin is quite right - 'apparently insolvent' and 'absolutely insolvent' are two completely different phrases with completely different meanings. Worrying David would make that mistake and hopefully just a typo on his part rather than a lack of awareness of the difference...

D. unfortunately Kevin's wrong when he thinks the accountant in bankruptcy would not protect a trust deed where the person is solvent - there have been lots of instances where this happened, as evidenced in their recent consultation. Heaven help those poor clients if they find themselves unable to pay their trust deeds...

E. Kevin's advice about checking if there is a whole of market broker who can help you is good. Alternatively, if you could afford a high enough monthly payment between you to be able to repay all the debt within a maximum of, say, 10 years, then the Debt Arrangement Scheme is likely to be your best option, without putting your property unnecessarily at risk.

I hope my thruppence worth is helpful for you hazel!

Hello GayleC.

I think it's entirely clear that David made a little mistake on a technical term in his last post on this topic - something that Kevin had already stepped in to correct. To be honest, we've all done that on here at some point in the past. One of the good things about this forum environment is that those with knowledge can work in a collegiate fashion - when the inevitable happens - for the benefit of our site's readers.

What's "normal"?

It's hard to say when firms are taking divergent views on the subject of equity. Clearly some firms have adopted a more "IVA" approach which clearly carries significant risks should a trust deed fail. David clearly highlighted the nature of that serious risk in his post. It seems to me that anyone entering a trust deed on this basis would need to be made emphatically clear on the risks involved.

Having said that, if some firms are taking this approach (and making their customers emphatically clear about the risks) then shouldn't people be free to make their own decision about how they proceed? If the option exists, I'm not sure how it would be fair on a customer not to let them know about it?

Kevin's response seemed somewhat nuanced to me, and was clearly a statement of understanding rather than fact. It's interesting to read what you've seen the AIB doing in this area.

I must agree with you in the respect that the advice team here at Trust-Deed.co.uk have been surprised (sometimes quite shocked) by the things that some of our enquirers have been told about equity by other firms before they got in touch with us. Our experience has been that some customers haven't apparently been given the opportunity to make an informed decision because there has been insufficient (sometimes zero) explanation about the associated risks.

A few years ago (post Credit Crunch) we read horrific stories on here about people losing their homes because they were unable to remortgage. I do fear that without really clear advance risk warnings about equity, and totally informed customer decision making, we might start to see similar threads again in the future.

Thanks TDA. I agree with and share your fear that companies who are taking this cavelier approach to equity are definitely storing up problems for the future.

On the 'apparent insolvency' v 'absolute insolvency' I've just looked back at the topic titled '85% valuation' amongst others, and it appears that David regularly makes this mistake... Perhaps David could clarify please?

Hazel71 - I hope the advice on here has been helpful and that you don't get sucked into something with trust deed Scotland that's not right for you - you had said you were going to meet with someone there next week?

Hi GayleC,

The thing is that David's here to answer questions from members of the public who are worried about their debts or who have a question about how debt solutions work in certain scenarios.

I'm not sure that you fit into either of those groups?

This site has been running since late 2007 and we've had plenty of people with obvious expert knowledge join the forum over the years.

Some have done so using their own names, others have used usernames.

Some have clearly been motivated to help people who are visiting the forum for answers and information. Others have sometimes appeared to be operating with a bit of an agenda.

Hi TDA - my only agenda is to ensure that people receive good quality debt advice. Yes, I know more than most on this subject and if I raise any questions it is only because I want to ensure that points are challenged and discussed appropriately. It's much too easy these days to adopt an attitude of 'I read it on a forum so it must be true'. It often isn't.

Great - the more knowledge here the better for our members and readers.

I'm sure you'll keep it collegiate and positive in line with the ethos of other experts who have, or still do, post here.

Regarding your point D, GayleC - I believe that this is a fairly recent change in policy at the Accountant in Bankruptcy.

I am sure this is as a result of the various cases coming to light of the type in question, but it seems like it shouldn't happen going forward.

Thank you all for your advice. We have spoken to an IFA and it looks like there is hope for us. All I want is for someone to give us a chance
to repay all our debt and start afresh. Hopefully that is about to happen!