Welcome to the forum dakota.

Here's an article on this very subject:

https://www.trust-deed.co.uk/equity-homeowner-house.html

Before starting a trust deed you'd want to clarify exactly how much equity is in the home and agree exactly how that will be dealt with.

As you say, mortgages just before or during a trust deed are unlikely to be available. The equity will almost always need to be dealt with in another way.

What that way is really varies according to the circumstances and what can be agreed with a prospective trustee. Examples might include:

1 - Agreeing an additional period of payments (over and above the usual four years) in lieu of dealing with the equity. This may have some risks - see the article.

2 - A third party (perhaps a relative) paying in a lump sum to deal with the equity.

3 - Sale of the property - though few people wish to consider this.

A DAS lasting nine years seems to fall within the usual sphere of reasonableness, presuming of course that you can realistically expect to continue that level of monthly contribution for nine years. It's a long time, but it would keep your house out of it altogether.

Thanks so much for your reply - I did read the article prior to posting and it's been very helpful.

I'm in the process of trying to get a valuation for my home which hasn't yet been confirmed at the moment but I suspect there will be around £20k of equity in the property.

Unfortunately I don't have anyone who can pay a lump sum towards the equity...I really wish I had a money fairy right now!

The DAS would be my preferred option in terms of removing my property from the equation as, being on my own, I genuinely am worried about the potential of losing it.

Hi dakota.

Some firms can get a valuation done on your property for you pretty quickly and without there being any expense or commitment for you.

You'd just need to get hold of the current mortgage balance, which is usually quite straightforward to do (if you haven't already).

Thanks again - I'm trying to get someone to look into that for me at the moment and already the current mortgage balance so that's one thing. I guess it's more so whether it's a TD or DAS which would be the right option. If a DAS is refused it is then still possible to apply for a TD?

Hi dakota,

My firm are one that will carry out a free valuation to establish the equity in a client’s property.

I can generally have this back within 2-3 hours of requesting it so we can establish the equity pretty quickly if you know the mortgage balance.

Whoever you use for advice they should be prepared to do a free valuation for you.

Did step change work out how much you could afford to pay per month to a plan?

Also, who are you main creditors that you owe money to?

Yes dakota - and vice versa.

What's your instinct at the moment about the best way to go?

The advisors I'm speaking to are looking into the value of the property at the moment. Main creditors are credit card companies so unsecured debt.

Gut instinct is a DAS if possible as I really would like to avoid the potential of my home being involved and as it stand I foresee no issues in terms of being able to pay the sum of money which StepChange has identified as being available to pay to a plan.

That makes sense dakota.

There's often no right and wrong in these situations, just two perfectly decent options each with different advantages and drawbacks to weigh up.

Hi dakota.
When you say that the firm advising you are looking into the valuation right now, does this involve them sending out a surveyor? If not then they are probably getting some kind of desktop estimate which is only really useful as a rough guide usually.

If you were considering using my firm then we would get a proper valuation organised so that the figure is absolutely certain before you made any decisions as to how you would wish to proceed. This would be at no cost to yourself.

Worth doing if only to rule a Trust Deed out I'd say, or maybe to confirm that the equity is low enough to mean that a Trust deed is viable after all.

As you say, 9 years is a long time so no point in rushing this decision!

Thank you for all the replies - much appreciated.

Kevin - at this stage it's a desktop estimate but I expect there to be at least £15K of equity in the property which I would assume the creditors would expect to be realised through a Trust Deed.

As things stand I have already had to advise most of my creditors that I'm in discussions with StepChange etc and so far most have been reasonable however I'm aware that might not remain the case for long.

Hi dakota.

I think you'll find your creditors do give you a little breathing space to get a plan in place.

This is the expectation once they're aware you're working with debt advisers.

Hi dakota,

A good Expert should suggest putting in place something called a Form 29 - Moratorium. This provides you with a 6 week protection period for you to consider your options without the fear or any creditor taking legal action.

As TDA suggested though once you highlight that you are taking advice from a debt advice organisation they tend to back off and give a little breathing space. The Moratorium however is handy to give reassurance that legally they can't do anything for 6 weeks.

Have you actually sat down with anyone face to face to go over things? I always think that when you involve assets and especially a house it's always better to do things face to face.

When you were speaking about your options you said that 9 years on a DAS is a long time. You also need to factor in potential change in circumstances that could occur in those 9 years that could impact on your ability to pay the payment and that could result in a reduction in payment and extension of the plan. It could also work the opposite in you could afford to pay more and the timescale could come down. An example for this could be childcare. At the moment my two children go to a childminder but in the future they won't and we will be financially better off. When you are signing up to a 9 year plan these should be the things that a good expert discusses with you

If you then look at a Trust Deed it may only be over 4 years depending on your equity. Like Kevin advised a proper valuation could mean that you have no equity compared to a desktop valuation. This is why things can vary slightly from firm to firm and it's always advisable to speak with a couple of advisors/firms. No one ever wants to risk their property and in the majority of Trust Deeds whereby a property is involved there isn't any problems.

You want to ensure that you receive the correct advice regarding all of your options, you know how much equity your property has and then decide which option best suits your circumstances. As I said face to face in these scenarios always normally helps.

The positive is that you have options to help you clear your debts. One could be 4 or 5 years and the other could be 9 years from what you say.

Thank you again for the replies.

I am meeting with a firm tomorrow to discuss the TD scenario which should help
answer some of the questions I have. However I guess my biggest fear is the potentiality of having to realise equity in the property and, despite not having a firm valuation, I know there is definitely equity there.

Right now I can see no reason why I wouldn't be able to make the payments within whichever plan is set up and would hope that I may be able to reduce the period of time if I went down the DPP route.

As I say my main concern is the involvement of my property in that if I was unable to realise the equity would there be the potential of being forced to sell.

Hi Dakota,

It might be possible to extend the term of your Trust Deed by 1 or 2 additional years (depending on the level of your equity) and pay over a proportion of the equity that satisfies the creditors and the Accountant in Bankruptcy. If this is the case then it should be all confirmed in writing on a statutory form called 1B – Agreement in respect of heritable property. This will confirm the level of equity and how you have agreed to pay this over.

The only way in which the property could be sold or at risk is if you didn’t stick the agreement which you made at the start of your Trust Deed and which was confirmed in Form 1B. As a result you need to be sure that you are able to sustain any agreement that you make if it is the Trust Deed that you proceed with. If you do that then your property would not be at risk.

Your best to make a list of questions you want to ask the company tomorrow and make sure that the answers you receive you are happy with.

Good luck with things. Please let us know how you get on.