Hi jim3 and welcome to the forum,

It sounds like you are in a difficult position financially. There are plans available to help your debts but each plan has different criteria and consequences.

A Trust Deed for example takes into account all assets which you own.

If you are asset rich and you have £70,000 of equity with unsecured debts less than this then you could not consider a Trust Deed as you are not technically "apparently Insolvent" which is one of the criteria for a Trust Deed.

Also, if you used credit to buy a van then out that debt into a Trust Deed this could be frowned upon by creditors and it could be a reason for them to reject the proposal. In addition you would have a £9,000 vehicle which would be treated as an asset and could be sold.

The plan that could be the more suitsble plan is the Debt Arrangement Scheme which does not take into account any assets that someone owns. This plan is s repayment plan whereby you make a monthly payment until all of your debts are repaid back.

Whichever plan is the right one for you it will be based on your ability to pay and sustain a monthly payment.

If things go wrong for you could you afford to pay a payment per month to a plan?

The best way forward is to speak with an expert about your circumstances.

hi David
thanks for your help i am looking to move forward with this in next few days and i am getting as much advice as possible i have been getting very unwell with worry about the debt and am on medication from doctors i need to have a plan in place where i can see the end game so i can concentrate on getting well trust deed is the way i would like to go are you telling me that i will not be able to do this the banks have rejected any loans or mortgage extensions i do have 70k equity and 23k debt

Hi James,

When it comes to a Trust Deed, you need to be ÔÇ£apparent insolventÔÇØ which effectively means that you are unable to pay your debts.

As you have approximately £70,000 of equity and £23,000 of debts you could technically sell your property and pay your debts and therefore you are not Insolvent. If you did proceed with a Trust Deed it could result in sale of your property for example.

In scenarios whereby someone is asset rich i.e. their income or assets are sufficient to pay their debts back in full or within 4 years then a Debt Arrangement Scheme is the more suitable option. This plan does not involve any assets and therefore won't put your property at risk.

A Debt Arrangement Scheme is a repayment plan whereby you make an affordable payment per month until your debts are cleared in full. The plan doesn't have a fixed timescale but ideally we try not to run them longer than 10 years (creditors accepting/rejecting the plan). Based on £23,000 of debt, paying this back over 10 years would cost you in the region of £192 per month. If you set this plan up with the Citizens Advice then it's free. If you use a private company then they will charge a fee which can potentially increase the term of the plan.

Have you spoken with an independent financial advisor to see if there is anything they can do with your mortgage and the equity?

The best thing to do is speak with an expert who will be able to take you through the full in's and out's out all of the available plans.

There are some firms out there that are setting up Trust Deeds for people despite the individual having large amounts of equity. This approach is based on the IVA process down in England, but is a bit of a grey area in Scotland as was traditionally never seen as possible here. Nevertheless, there are certainly plenty of people that have recently set up this kind of arrangement.

I would advise extreme caution however, as you could be putting your home at risk. At the end of the day a Trust Deed is a formal insolvency procedure and if you own a house with a lot of equity in it then there is a chance that creditors could reject your trust deed proposals and seek your bankruptcy instead.

As David says, a DAS may take longer but might be a safer/more suitable option for you.

Thanks for all your help been great advice honest and to the point.
In the out come I tried for a trust deed and was refused what are the consequence of that situation

You'd still have the other options open to you jim3.

Hi jim3,

You can still consider the Debt Arrangement Scheme. It's obviously not ideal in terms of the timescale between that and the Trust Deed but it can safeguard your house (providing it's accepted, you maintain the payments and your mortgage) and stabilise your situation.

Often when I speak with someone it's the constant worry about juggling all of the debts and trying to make all of the payments that is the hardest thing.

With the DAS all of that is taken away from you. You have one payment per month to make and focus on and the plan will give you a fixed timescale and a light at the end of the tunnel.

If your circumstances change during the period of the DAS i.e. a regular increase in income you can increase your payments to bring down the timescale or if you decided to sell your house you can use your equity to clear the remainder of the debts. In that regard it can be flexible.

The positive thing to remember is that you do have a solution to help you deal with your debts.

I have just read the above information and wondered if you could please help/advise me.

I signed up to a Trust Deed 3 years ago, and have been paying this at £197 per month. Half way through the trust deed, I was advised this had been passed to another company to take forward and I would be dealing with them in future. I recently received a letter from them to advise that as my 3 year period is coming to an end that I would need to decide how I would be paying towards the assets I have ÔÇô namely my house. When I signed up to this, I had been experiencing severe problems with health, marriage and work. My husband left marital home and all his debts behind him. Long story short when I signed up, I was told that I would not lose my house or my car and it wouldn't be a problem. It was not explained to me that at the end of the trust deed period that they would want me to pay back anything further. Apparently I have £14388 assets from my home and I have a gifted private registration plate on my car worth £100 which I need to realise also. This now means that I need to remortgage my home, sell it or continue with the payments for probably a further 73 payments or as they suggest ask a family member or friend to lend me the money, which I cannot do as there is no one. I would not be able to remortgage either as I am now 58 and have been registered disabled due to an autoimmune condition which will only progress, which means I eventually may not be able to work. I have had to cut my working hours down to 3 days per week and was depending on this trust deed coming to an end in June. Is there anything I can do? Any help/advice you can provide would be appreciated.

Hi Bellabob

I can't give you any advice but my heart went out to you when I read your post. I can only begin to imagine how you must be feeling.

I hope the experts here can guide you towards a better solution than you seem to be facing.

Hello bellabob and welcome to the forum,

Sorry to hear about your health and the concerns you have regarding your Trust Deed.

When you enter a Trust Deed it will involve any assets which you own. If you own a property and this has equity then you will need to reach an agreement over this at the outset on how this will be dealt with.

At the outset of the Trust Deed a valuation of your property should have been obtained along with an outstanding balance (redemption figure) for your mortgage. Once this has been done it should then be confirmed in writing how much equity your property has and how this will be dealt with during the Trust Deed.

Can you remember what the agreement was when you signed your Trust Deed regarding your property and the equity? Did you agree to make any extra payments at the end of the 3 years?