Hello skintandfat; welcome to the forum.

There are a couple of ways to answer your question:

Debt advisers are trained to work through your circumstances with you to establish how much you can afford to pay towards your debts each month. This key piece of information is then used to help establish which debt solution options are open to you (which may or may not include a trust deed). We'd suggest that this would be the best way for you to proceed and subsequently establish whether a trust deed is available to you and suitable for you (and indeed whether there are better options open to you).

The guidance to trust deed companies is that they should be able to anticipate returning at least 10% of your debt to your creditors if you sign a trust deed. That would mean ?ú5400. To that you then need to add the fees of the trust deed company (perhaps ?ú2500 to ?ú4500 though this varies according to the details of your case) plus Vat (20% from tomorrow) and their outlays connected to the case. Take this total and divide by 36 (the normal number of months that a trust deed runs) and you'll have an estimate of the monthly contribution that might be required for the trust deed company to comply with the guidance to them.

A trust deed can run for longer than 36 months to make it viable if this is acceptable to the client, the creditors and the trust deed company.

You'll notice that the fees of the trust deed company are extremely important in working out whether a trust deed may or may not be available to you. This factor is often ignored by people considering a trust deed because they don't think the fees matter (after all, they're taken from the money that otherwise would have gone to creditors). In fact for many people they matter a lot, it can make the difference between a trust deed being available or not, or the difference between a normal 36 month trust deed or a longer one.

We (in the site advice team) were called by an individual last year who had been told that if she (and her husband) were to go ahead with a trust deed each case would have to last 5 years (60 months). When we looked into the reason why it became apparent that the trust deed company (a very well known international accountancy company) were proposing to charge each of them ?ú7500 in fees. ?ú15000 (plus Vat) to manage two connected trust deeds! They subsequently spoke to Mark Mcfadyen (one of our forum experts) who was able to organise the usual 36 month trust deed for each of them by charging a more realistic fee level. Out of debt two years sooner, and many thousands of pounds saved which otherwise would have lined the pockets of what can only be described as a greedy insolvency practitioner who had no personal conscience about keeping two people in trust deeds for two years longer than they needed to be.

I'd suggest that you work through your circumstances with a qualified debt adviser or a reputable trust deed company skintandfat. You'll then know where you stand and will be in a position to make a decision. If a trust deed appears to be one of the possible options I'd suggest that you take a close interest in the proposed fees.

If your property has no equity currently it could potentially be excluded from the trust deed altogether. You'll want confirmation of this in advance of signing the trust deed (good trust deed companies will be happy to do this) and you'll then have no worries about the property being revalued towards the end of a trust deed if equity were to develop later.

Thanks for the reply

My work has dropped by 80% and I am just ticking over.

Including my 2 business overdrafts my total unsecured debt is ?ú60,000

My spare income is virtually nil (I am struggling to pay my business mobile bill and my council tax bills)

The only thing that keeps me from going under is WFTC as we have 3 kids and my business has made no income last year. The WFTC pays the mortgage and my business brings in enough to buy food, everything else (like card payments, clearing overdrafts) goes by the wayside

The situation is as follows
Mortgage ?ú95000
Unsecured debt ?ú60000
House value ?ú100,000-?ú115,000
The house value can't be realised until the building works are complete;
New En-suite (inc drainage) estimate ?ú4500
Remainder of building work inside ?ú2500
Drainage (for gutters) ?ú650
New boiler (existing one isn't coping with double the floor area) ?ú1300

Total Estimated works req ?ú8950 (minimum)

This leaves my house @ ?ú115,000 and about ?ú10,000 equity that will only be available if I can get the work done, otherwise the value will drop as it is a partly finished job

Hi skintandfat (great name)

TDA is correct. Your best option is to work through an income and expenditure and see if there is an option that suits your circumstances. More importantly, you need to ensure that the position re the equity (or non equity) is fully clarified in writing before doing anything.

Mark

Unless you have something to offer to creditors then I'm afraid your options are very limited at present skintandfat. You are either looking at continuing to pay token amounts until hopefully your income improves, or considering sequestration as an option instead.

Thanks Kevin

That's what I thought

I am leaning towards a LILA as I have been paying token payments for a year and a half now. There is no improvement in the building trade and it has actually got worse in the past 3 months

I am now mopping up the jobs where I make very little money on it (I do work for a charity at 50% of the labour- it keeps my turnover and pays the business bills). Ths charity wait until I have a quiet spell and I fit in their work.

My only consern with a LILA is the house, I really need to seek professional advice on this as I am not prepared to lose my house.
The cloud on the horizon is my creditors taking me to court and getting security on the house.

If anyone has any suggestions for a place to give phone or meeting advice then I'm all ears (as spock would say [:D])

My other concern, is that my dad is getting on a bit and hopefully all will be OK. If I did a LILA how long would the IP keep an eye on my finanances?

First of all, just to clarify it wouldn't be a LILA application as you own your home so would not be eligible to apply for sequestration under this route. Instead you would need to get a certificate for sequestration signed off by an insolvency pracitioner or money adviser (eg local authority money advice service or CAB).

I couldn't give you any assurances about your property. The trustee appointed to administer your sequestration would have the property valued and would look for any equity to be realised. If there is equity then it may be that you would have to find a third party, such as friend/family to make a payment, otherwise there is a risk that they would force the sale of the property instead. Hopefully if the equity is fairly low then a small lump sum would be enough for a third party to "buy out" the trustee's interest.

Regarding your last point, after 1 year you are discharged from the sequestration so any windfall you receive after that time would be yours to keep.

Spoke to someone today who looked at my statements and said that I could possibly have a certificate for sequestration in her opinion.
She did say there would have to be a lot more financial digging by her to check there were no hidden assets etc.

The only downside is my house - the mortgage is ?ú85000 and I had the house valued today- the valuer said the house may be around the ?ú105000 mark - as I had partially done my extension.
He reckoned it would take ?ú15000 at market value to finish the house

So i'm between a rock and a hard place- enough equity to make my house a target for my creditors and no money to pay my debts

Discuss [8D]

Hi skintandfat

It may look like you're caught in the middle, but in fact you're not. Taking account of the size of the debts, one of 2 things will happen. Either you're creditors will eventually go for bankruptcy or you will do it yourself.

If you do nothing, the house will probably rise in value. One or more of the creditors will proceed with letters of inhibition to stop you doing anything with it and ultimately and eventually bankruptcy.

Unfortunately there is no real route as such.

Mark

I feel that I will be better off finishing the house to a decent standard and then selling.

I have been toying with the idea of getting a dodgy secured loan with a higher interest and finishing the house off.

Then selling to release more equity- do you consider this a risky option?

Would I get finance against the ?ú20000 or so equity?

The surveyor suggested the house would be worth ?ú140000 when finished

Hi skintandfat

With no surplus and no real proveable income, the answer is no.

The sub prime market is dead and does not look like improving for a long time. Even normal lenders are looking for 60-75% LTV which makes lending on property extremely difficult.

Mark

Hello skintandfat,

If you're prepared to dispose of the home to deal with your debts would it be worth considering bankruptcy or, if a sale would generate a reasonable lump sum now, using the funds generated to make a trust deed viable?

Is your house jointly owned skintandfat? If so then the equity would be halved, so more like ?ú10k rather than ?ú20k, which may be a little easier to gather together in a sequestration or trust deed. Is all of the debt just in your sole name?

The surveyor just phoned

The house at present is valued at ?ú87000 [:)] (mortgage is ?ú85000)

This changes things alot