Hi Dazzla359 and welcome to the forum.

When it comes to a Trust Deed the Trustee needs to establish how much equity there is and what your share of this is if you own a property.

It’s difficult and complicated if you transfer the house to your wife without receiving any money back from her for it. It’s called a Gratuitous Alienation under the legislation. What it effectively means in layman’s terms is that you’ve given away an asset and didn’t receive your share of this. Under a Trust Deed or Sequestration this needs to be looked at. There isn’t any way for the property not to be looked at in a Trust Deed.

Also even if you weren’t in debt the mortgage lender might not agree to allow your wife to take the house on in her sole name as she might not be able to afford it based on her affordability.

The first thing you want to try and do is have a think about your budget and how your income and expenditure might work out once you move out. How much will your rent be, will you pay maintenance etc. From this you will have a good idea how much you could afford to pay per month towards a plan. Have a look online at properties to see what rent might be.

Then it’s about looking at the property you jointly own and calculating how much your share of the equity is. A valuation would need to be obtained and you would need to provide a settlement figure for your mortgage. Once your share of the equity is confirmed then it’s about working out how much of this can be paid over into a Trust Deed. Plenty of Trust Deeds are set up whereby all or a proportion of the equity is paid over. This could be by extending your payments at the end of the 48 months or by a third party paying this over. Various ways it can be done. It’s also pretty common for someone to over estimate how much equity their property has. The smaller the amount of equity the better for you.

If you are completely against any plan which would involve the house then you could consider the Debt Arrangement Scheme. This plan you would pay back all of your debts and the timescale is determined by how much you can afford to pay per month. If for example your debts are £47,000 to repay this over 10 years the payment is approx. £392 per month if you use the free sector to set this plan up.

The important thing is to reach out to an expert who can look at all of your options and then give you advice on what you can do. Don’t rush into things, take your time, do some research and speak with an expert. I'm sure the two experts on the forum would be happy to give you some advice.

Can you tell of us the £47,000 of debt you have who do you own the largest balances to? Different creditors have different acceptance criteria in a Trust Deed.

Try to remain positive, there are solutions available to help you deal with the debts it's just working out which one best suits you.

Hi swandog,

Thanks for replying, my wife sold her previous house and put 30k deposit in so does not leave a lot of equity to share, I have looked at continuing to pay my debts as they are and covering my rent etc but it’s not gonna be doable. Does the debt arrangement scheme leave my mortgage out of it? I could pay over £400 a month on the scheme.
Barclaycard 7400
Tesco loan 13500
Tesco card 10400
MBNA 5500
Virgin card 3000
Next 1500
Barclay finance 7000?????? Is this classed as a personal loan?? It was finance on a kitchen.

Hi,

Is the property in joint names at the moment? I appreciate that she might have paid a big share of the deposit but when it comes to an insolvency option the Trustee would look at the overall picture. A Trustee could still look at the equity on a 50/50 split.

Those lenders are all ones which are happy to accept a Trust Deed if you choose that as an option as long at their criteria is met.

A Debt Arrangement Scheme will leave out the house and have nothing to do with it.

The best advice is to look at all of your options to then work out which one best suits your circumstances.

You could do a 10 year repayment plan on a DAS or it could be possible to look at a Trust Deed over 4-5 years depending on the equity and how this is looked at and paid over.

Not all firms offer all available solutions i.e. a Trust Deed, Debt Arrangement Scheme or Sequestration so make sure whoever you speak with can set up all available options.

When it comes to the payment per month that you could afford to pay i.e. the £400 you need to make sure that you are not cutting back too much to pay as big a payment as you can. It’s about a balance or else you can end up missing payments.

If the Barclays Finance is a personal loan then this would be included into any plan that you did. That doesn’t mean they can come and pull out the kitchen. It’s an unsecured loan.

Who do you have a bank account with at the moment? If you have debt with that bank you will need to change accounts. Also if you have an overdraft this will be a debt too.

I think I’m going to try and avoid the trust deed and aim for DAS or DMP, I was going to do this when I move into rented property due to my shared mortgage payment will show less than what my rent will be and get everything onto my own account to simplify things. What would happen if a creditor rejects the offer?

I wouldn’t immediately rule out the option of a Trust Deed. The best thing you can do is speak with an expert who can look at everything. You don’t want to look back with regrets on a plan that is taking you 10 years rather than 4-5 years. It’s about balancing up the pros and cons and what you feel best works for you.

You could start the process now speaking with an expert looking into it all and once you have settled expenditure and a property to rent you could proceed with a plan.

If on a DAS if one lender rejects the offer then it can be referred to the Accountant in Bankruptcy who will carry out a fair and reasonable test. They have the power to allow the DAS to go ahead even if someone has said no to it.

Thank you very much for taking the time to give advice and answer my questions. I will get chatting to someone soon about everything.

You are welcome. I’m positive once you speak with an expert you will feel a whole lot better about things and have a better idea of what to do.

Let us know how you get on.

Hi Darren

Just to back up what Swandog has told you already, whilst it isn't as straightforward as transferring your share of the house to your wife and then not having to take it into account in a Trust Deed, that doesn't mean that it wouldn't work as a solution - particularly if you have a reasonable amount that you can afford to pay each month, which it sounds like you have.

I too would definitely recommend you getting some one-to-one advice to assess your options, including speaking directly to an insolvency expert. Sharon or myself would be happy to do so if you wish.

You may still decide to go down the DAS route, which is fine of course, but at least you will have a clear picture of what you are choosing between.