Hi Peggy and welcome to the trust deed forum.

If your home would truly be valued at £70000 I think signing a trust deed could be a mistake.

In a trust deed you have to pay over the value of your assets (including the value of any equity in your home) as well as your surplus income each month.

Is your home jointly owned?

What's your estimate of the value of your home based on?

How much do you think you could afford to pay towards your debts each month (for example a payment you could afford to make into a trust deed and still have enough money left over to live)?

If you have a debt to RBS you'd need to open a new bank account with a new bank (that you owe nothing to) before starting a trust deed or any other type of debt solution. That shouldn't affect your mortgage though so long as you continue to pay it as normal.

Don't panic about a trust deed possibly not being the right option for you; if it isn't there will be other options as well.

house is not jointly owned. Just going by the prices in the area could maybe be worth more , could maybe afford about £250 per month to trust deed. what other options have i got if not td.

If you only owe 10,000 can you not take some equity out of your house, or get a secured loan? I don't think a TD would benefit you at all as you have the money available to cover the debt but just can't get access to it. A five year loan for 10,000 would only cost about £250/month and that way your credit rating isn't destroyed

Thanks for that information peggy.

Based on your comments I'd suggest that a trust deed simply isn't necessary for you, that better options exist, and that a trust deed would have potentially serious ramifications for your home.

The Debt Arrangement Scheme seems like a good possibility for you and you may wish to read a little more about it at:

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

At £250 per month the Debt Arrangement Scheme would appear likely to last for around 40 months to clear debts of £10000. That's only four months longer than the standard trust deed term of three years. Unlike a trust deed the equity in your home isn't taken into consideration. Interest is frozen if the scheme is agreed.

You'd also be avoiding a formal "insolvency" and your creditors would be repaid in full, something which most people prefer where it can be done within a realistic period of time.

Hi again Peggy.

SkintAlly makes a fair point as well (I think we were writing at the same time!).

Refinancing may be an option.

The big warning about converting unsecured debts into debts that are secured on your home (via a mortgage or secured loan) is of course that if something went wrong the home would be at much greater risk than it was previously.

Another warning is that the interest costs can really mount up over the years if debts are effectively "extended" as part of the refinancing. This can be the case even if the new interest rate appears lower than the rates currently being paid (if the term is longer).

The benefit is that avoiding the Debt Arrangement Scheme (or any other "debt solution") is likely to be better for your credit rating as SkintAlly mentions. This is something which may or may not be important to you.

thanks i will look into the debt arrangement scheme, it just now i am living on my overdraft and cant get a loan i have a bad credit rating and also the bank wont give me money on my mortgage at the moment ie remortgage

I think that might point you back towards the Debt Arrangement Scheme peggy. Please let us know if you have any questions about it after you've read the information. George White (one of our featured experts) is a DAS Approved Money Adviser (they're the people that can set up a Debt Arrangement Scheme). He'll be able to answer any technical questions that you might have.

so basically i would pay off all my debts , would the interest stop on these debts, would i have to change banks, how would it deal with my overdraft. how do i get in touch with george white.

Hi peggy.

Unlike a trust deed, the Debt Arrangement Scheme does require the full repayment of your debts. For you though this may not extend the period hugely as £250 per month on £10000 of debt doesn't lead to an excessively long repayment period.

If the plan was established interest on these debts would stop.

If you currently have an overdraft debt that would be included in amongst your other creditors in the arrangement.

You would have opened up a new bank account in advance so that you have an account that you can continue to use.

George White works for a trust deed firm that provides the Debt Arrangement Scheme on a commercial basis. He can be contacted via the contact form at the bottom of the Debt Arrangement Scheme page that I provided a link to previously (or on his profile page - see the main menu for the website to the left).
You could also approach DAS Approved Money Advisers that may be employed at your local CAB or at your Local Authority who can provide DAS services on a non-commercial basis.

Hello Peggy, From what I have read so far I believe a DAS ( Debt Arrangment Scheme may be the best option for you to consider. The scheme was devised by the Scottish Goverment to allow 'debt relief' for people who wished to repay their debts in full with out the need to enter into personal insolvency - trust deeds or sequestration. The scheme is a Debt Payment Plan which has the full backing in law which means once you have been accepted into a DAS your creditors are not allowed to charge any more interest or take any legal action against you. Based on your debts at £10,000 and a monthly repayment of £250 it would take you 40 months to repay. The DAS option ingnores any assetts you have and therefore is not interested in the equity in your home - incidently that was another reason the scheme was created to prevent folk having to sell their homes!