Welcome to the forum thomsen.

I very much doubt that your trustee will have an issue with this. Given your personal feelings on the subject, this would probably be seen as a great outcome for everyone involved (even if perhaps it might not be the best financial outcome for you).

The payments you have made already would indeed count towards the total sum due.

In terms of funding the costs of sale, this is another topic to discuss with your trustee. Given that your income will be increasing and your creditors stand to be fully repaid it seems very likely that they'll work with you on this.

The house cannot be sold without the consent of your trustee (as you probably know already) so I'd suggest getting in touch with them and talking all of this through.

Hi thomsen and welcome to the forum.

Can I ask what is it about the Trust Deed that makes you feel uncomfortable?

As you have said it’s a big decision especially looking to sell your house and maybe go from a home owner to rented accommodation so if you share some more information we can look at both sides of it for you.

1. How much is your total debt?

2. How much did you agreed to pay over to the Trust Deed?

3. How much equity is in your house?

4. Is your house jointly owned?

Like TDA has advised your Trustee should have no problem in working with you to arrange the successful sale and the repayment of your creditors in full. If this is going to happen then they may be flexible with any additional income. It’s something which you should discuss with your Trustee and whatever is agreed ensure this is confirmed in writing.

Perfect, thank you for the advice. I do appreciate that the Trust Deed is there to help but I've just been a bit uneasy since day one and feel like now might be our best opportunity to come to an agreement on an early exit.

Is it likely that my credit rating will still be affected for what would have been the remainder of the Trust Deed? Or will it start to improve in say a year or so following the property sale if it all goes through?

Hi thomsen.

Being discharged will certainly improve your prospects of obtaining credit versus not being discharged.

The trust deed is however going to remain on your credit file for six years from the date that it started, and this may continue to make it more difficult and/or more expensive to obtain credit.

In terms of new mortgages for example, many lenders will expect you to have been discharged for a period of years (2, 3, 4 etc - it varies) before they'll be prepared to offer their products to you.

Hi David, thank you.

There are things that we've found out about the Trust Deed that we weren't aware of prior to signing which would have likely prevented me from proceeding with it. On the day of the signing we still had queries and didn't receive any feedback on them. As well as that we didn't get much time to read over the documentation as the person who visited us for the signing had a long commute and needed to leave as soon as possible. I realise that onus is on myself to fully read up on this before making such a big decision and I'm accepting that.

Total Debt - £16,554.00
Contribution - £130.00/month
House Value - £112,000 (Roughly - hasn't been valued in just over a year)
Remaining Mortgage - £75,000 (Around there, can't seem to log in and check this morning)

I'm in the Trust Deed for an additional year due to the equity in the house. It is jointly owned with my wife and she isn't a part of this Trust Deed. We also had a joint overdraft which is included in the Trust Deed (£4k of the Total Debt above) however my wife was chased for this following the signing and we've had to set up a separate agreement for this despite them also placing a claim on the Trust Deed. This was one of the queries we had which hadn't been answered.

Thanks for the further advice, TDA. The financial advisor who got us on to the Trust Deed had said that obtaining a mortgage within the Trust Deed was still possible as long as you had enough of a deposit. We had stated that we would like to move within 5 years due to school zoning for my son and he told us that it was possible as long as we had a reasonable deposit. Is this the case?

OK it's letting me log in now, remaining mortgage is £73,780.48.

Thanks for the help.

Hi thomsen.

Any joint credit commitment will be subject to "joint and several liability". This means that each of you is responsible for the full balance owed,rather than each being responsible for 50% for example.
Because of this the bank will have been entitled to continue to seek repayment of the full balance from your wife, something which should have been made clear to you by your adviser(s).

In terms of obtaining a mortgage while in a trust deed, I'm afraid you've been very poorly advised. I can't remember this being a genuine possibility since the financial crash many years ago. Hopefully the adviser presented this information to you out of professional naivety rather than it being a cynical remark aimed at getting you to sign on the dotted line.

A good deposit will certainly make it much easier to get a mortgage at some point after your trust deed has finished, but it still might take some time before many lenders are prepared to accept an application from you.

Sorry I haven't been able to be more positive in this reply.

Hi Amy,

Thank you, we did get this information but only once it was signed and my wife was being chased. That’s a bit disappointing but thank you for that information all the same. If we were to sell the property, pay off the debt, then spend a couple of years saving I guess it would be possible at that point to possibly get a mortgage?

I’m between a rock and a hard place at the moment. I have stability in my current job however if things stay as they are I can’t see us being able to move until the Trust Deed is complete in 2021 or years after. Also, we have very limited money available now compared to starting the Trust Deed 9 months ago. Back then my wife was working but she now has to stay home and look after our 2nd child. It’s not viable for us to have two children in nursery as its too expensive so at this point we’re struggling to make ends meet. Obviously we haven’t worked out our finances particularly well in the past and we should have planned better but we are where we are and I just want what’s best for my family.

The contracting position is what has pushed me to pursue an early exit. It looked to me like a good opportunity to pay off short term credit and money to family which we owe and then invest a bit back into the property so that it’s fit for sale. I have to make a decision either today or early next week so I’m in a bit of a panic. I don’t want to take the position if it’s not going to be of any benefit as it actually involves me being away from home 5 days a week.

My choices are to either let things stay as they are and potentially end up not being able to continue the Trust Deed (most likely leading to the sale of our property anyway) or take this contracting position and pursue the sale as mentioned previously.

Hi thomsen.

We've heard from some people here that they've been able to get mortgages a couple of years after being discharged.

You might want to pick up the phone and talk all of this through with your trustee. Their detailed knowledge of your financial circumstances, plus the information you have about changes that have happened and which now might happen, may help them to help you to sharpen your thinking about what will be best for you and your family going forwards.

Hi thomsen,

Thanks for sharing some more information about your circumstances.

It’s disappointing to hear that things weren’t explained properly to you and you felt rushed into signing because of the journey. I know you say you should have read up on it before but at the same time an Expert should have properly explained everything to you in person and make sure that you knew everything.

I know it doesn’t help now but for anyone else that may be reading this it’s important to take your time, discuss absolutely everything and ensure that any questions you have are properly answered and even confirmed in writing by the firm. Also, where possible it’s best that you actually meet the Expert that will handle your case from start to finish.

Turning our attention back to your situation now…

I may have missed this but is there a reason that you want to move house i.e. outgrown your current house?

From what you have told us if you stick with the Trust Deed as is you will pay £130 x 60 months totalling £7,800 and writing off £8,754. Saying that, with the joint loan the saving that the TD will make for you would be around £4,754.

If you sold the house then your debt of £16,554 would be repaid minus any payments made to date and the interest and charges would be added. You need to clarify what the Trustees fees would be for this to happen. This could cost you £20k to £25k in total.

If you remained in the house, and after completing your Trust Deed then sold the house then you would benefit from all of the equity and have a much bigger deposit for another house. In my experience and since the credit crunch around 2008 I have not seen anyone be successful in securing a mortgage within a Trust Deed. There are also a number of factors which complicate this. I agree with TDA, it sounds like you have been very poorly advised in this regard.

Was a DAS (Debt Arrangement Scheme) discussed with you?

You could consider taking on the new contracting job and because of the change in the household income and your wife not working you may not be asked to increase your payments to the Trust Deed as you would now have additional costs. The additional income that you receive could allow you to remain in your current house.

Like TDA has advised it’s something that you want to talk through very thoroughly with your Trustee. Selling your house and paying off all of your debt there won’t be a problem with but you need to be sure it’s the right move for you and your family. Whatever you agreed with the Trustee make sure you receive this in writing.

Hi David,

We've been in the property for 9 years and there were only two of us back then so 3 bedrooms were more than enough. There are four of us now and the rooms aren't very big so we're really just looking for a bit more space. As well as that, my son is zoned for a school which has a particularly bad reputation so we're looking to relocate to another area within the same town. The neighbourhood isn't great either, we're very central at the moment so not ideal for young kids as it can get noisy at nights/weekends.

£20k to £25k is a lot of money and would massively eat into the equity especially if we get offered less than the valuation.

Total Debt - £16,554.00
8% Interest - £1,324.32
Total - £17,878.32

Total Trust Deed Contribution (9 x £130) - £1,170.00
Total Joint Overdraft Contribution (5 x £80) - £400.00 (Assuming this counts)

Remaining - £16,308.32

With this in mind are we looking at charges of between £3,691.68 - £8,691.68 or do other factors increase the repayment? It seems like it would be very costly to exit early so it's probably not a wise route for us to take. I think a call to the Trustee sounds like the best move for me to take at the moment to see if we can work out a solution.

A DAS was explained however the financial adviser told me that a Trust Deed best suited my situation. I don’t want to put anyone off going for a Trust Deed, I’m sure there are people who could greatly benefit from this solution, I’m just feeling like it wasn’t the right option for me.

Thank you for the advice, it’s much appreciated.

Hi thomsen,

That makes sense regarding moving.

When it comes to calculating the debt the Trustee will request creditors to submit claims to them. Sometimes your debt can be more than what you initially thought so best to check with the Trustee.

In terms of the fees it depends on what your Trustees fee structure is and what was agreed and proposed to creditors. Across the sector most firms will take a fixed fee and also a % of the realisations they ingather.

As you say best thing to do is speak with your Trustee about things.

Please let us know how you get on.

Thanks for all the advice. I'll be sure to update this once I have all the information and have made a decision.

I called the company that deals with our Trust Deed when I was considering this contract position and they said there would be no issues and that I would just need to be re-evaluated once I had changed jobs. I decided to pursue the position and handed my notice in. I'm currently set to finish with my current job on 24th February. There were numerous things to set up including a Limited Company, business bank account, public liability insurance, and an accountant amongst other things. I have completed most of these however my accountant wanted me to double check with the Trust Deed company based on the following points:

• The Trust Deed states that you may act as a Director providing there is nothing in the Articles of Association of the company that prevents you from doing so.

• The Articles of Association is the governing document of your company which I obtained via Companies House. The ‘Articles’ you have adopted is the standard model which applies to all companies unless specifically amended. The Articles state that any person can be appointed as a director of the company provided they are permitted in law to do so. The Articles also state that a person’s appointment as director will be terminated where a composition (a legal agreement to pay a sum in lieu of a larger debt or other obligation) is made with that person’s creditors in satisfaction of that person’s debts

• Finally, the Company Director’s Disqualification Act 1986 states that it is an offence for a person to act as a director of a company, without approval of the court, where a moratorium period under a debt relief order applies in relation to him.

I called the Trust Deed company just to confirm that the above points wouldn't be an issue and I was told point blank that I couldn't be a Limited Company Director. I explained that I called about a month ago and was assured it wouldn't be a problem but the person on the phone was adamant. He said they'd have no issues with me contracting however I couldn't be a Limited Company Director. I asked how else I was supposed to take on contract employment and they stated that they weren't familiar with contracting and what was required. I'm concerned and frustrated as you can imagine.

I have passed this information to him in email form so he can check with his colleagues. I really hope this all doesn't fall apart after coming this far.

Any thoughts on this?