Welcome to the forum Alison.

Which finance company is your car with? How much is the monthly payment?

Do you rely upon the car for work or other important reasons?

Hi my it's with a company called close motor finance, I have been able to keep it with the trust deed but not sure what would happen with the lila. I need my car to take my kids to childcare and to get me back and forward to work plus my son has some mental health issues and is autistic so need it to get him to his appointments at hospital and clinic.

Hi again.

I'm not sure of the details, but check back here as Kevin/David/Mark are likely to know whether this finance provider takes issue with bankruptcy. It's a good sign if they haven't taken issue with your trust deed.

How much is the monthly payment for the car?

Hi my monthly payment is £126, it was only set up in April and runs for 3 and a half years, the car is only valued at about £4000.

There are no guarantees, Alison, though Close Motor Finance are not one of the finance companies that are usually problematic, as far as I am aware.

How would I find out? And how do I go about changing from a trust deed to a lila?

Hi.

You could ask the finance provider how they'd react if you became bankrupt.

We cannot tell you whether your trustee (in bankruptcy) will be happy to allow you to keep the car. The facts that you appear to need it and that the payment is fairly modest seem to work in your favour though.

You have no access to bankruptcy until after your trustee releases you from your trust deed. You'll need to ask your trustee if they're prepared to do that.

Hi again thanks for your help. Do u think it would be better to apply for a lila if I am struggling with the trust deed payments? Is there a minimum monthly amount that is allowed to be paid to a trust deed or is it just whatever I can afford to pay?

I am quite happy with my trust deed but as I say I cannot afford to pay what I am paying but not sure if what I can afford to pay would be enough.

You'll need to talk that through with your trustee Alison to see how they see it.

Unless they agree to release you from the trust deed you cannot apply for LILA bankruptcy.

A reduced payment to your trust deed might mean that it's extended so that your creditors still received what you offered and they accepted.

I'm not aware of close motor finance being problematic either Alison. You may want to look at the full terms and conditions of your finance agreement to see if it mentions anything to do with bankruptcy.

Normally finance companies are reluctant to take the vehicle back as if they do, they will then be owed a balance on the finance which will be included into either a Trust Deed or Sequestration. As long as payments are maintained they are usually fine and allow you to keep the car.

I'd sit down and work through a very thorough budget to see what you can afford to pay and then discuss this in detail with your relationship manager. If you simply cannot afford a suitable payment then Bankruptcy may be the best option.

Let us know how you get on.

Hi everyone, thanks for your help, I have read through my terms and conditions with close motor finance and it doesn't mention anything about bankruptcy but does mention if the car is returned I would need to pay 50% off the agreed contract which would of course add to more debt. I am currently in talks with my trustee about payments to see what would be the best course of action.

Unfortunately in my circumstances once I had signed my trust deed, most of my living costs went up and my income came down which is why I am now finding myself in this situation but hopefully everything will be sorted in the next couple of weeks.

Hi Alison

If you return the car, then you would not be liable for the 50% as the Trust Deed would deal with this. It's a contingent debt and would be caught by the Trust Deed, so no need to worry.

Mark