Hi Phoenix and welcome to the forum.

Well done on reaching out for help and advice. This is often the hardest step to take. You will receive plenty of help, support and guidance on the forum from the Experts and other people who have been in your situation and successfully dealt with it.

I think it makes complete sense that you consider repaying your mortgage balance rather than just the interest and I don't see the creditors having a problem with this.

The only issue could be your affordability in that on a Trust Deed you need to pay a suitable payment per month which the creditors will accept. Let's say that if you paid the repayment mortgage payment this could mean you don't have enough money left over to pay a Trust Deed. A good knowledgable Expert can go over a very thorough income and expenditure to see what you can afford and what will be acceptable for creditors. Kevin or I the two Experts on the forum would be happy to give you some help regarding this.

Do you know if your property has any equity and is it jointly owned?

Also, can you tell us how much debt you have and who you owe the money to?

Try to remain positive and not over think or worry too much about things as I'm confident there are solutions to help you become debt free.

Hi David,

Thanks a lot for coming back to me. To provide a breakdown:

Property Value is 110-115k
Outstanding Mortgage - 94k
Unsecured Debt (credit cards and loans) is 65k
Yearly Salary 44k

I also have a young daughter whom I pay 385 a month maintenance for.

I would appreciate if you could give me some advice on my options. What level of payment would I be expected to pay toward the trust deed?

Just to add the mortgage is in my sole name.

Thanks

Hi Phoenix,

Your welcome. Happy to help. I always think to myself it takes a lot to register, type a post and then wait anxiously refreshing the forum for a response to try to response as quickly as I can.

It would appear from those figures that the equity In your property might be minimal and therefore a Trust Deed could be a suitable option. I would need to actually arrange a valuation of your house to establish exactly how much equity your property has. This isn’t an internal inspection, it’s a drive past and it’s not something you are liable to pay, we cover the cost of this up front. If your property has a little bit of equity then you may need to extend your Trust Deed for 1 additional year to pay over a proportion of this.

In relation to what you would need to pay per month towards a plan, either a Trust Deed, Sequestration (Bankruptcy) or a Debt Arrangement Scheme we calculate this first of all by going over a very thorough income and expenditure. The payment you pay per month should be the amount you have left over after you have paid all of your bills such mortgage, council tax, maintenance payments, car/travel costs, food etc. I appreciate though that you ideally want an idea of what you would need to pay per month.

Like I explained on a Trust Deed you need to pay a minimum payment per month for the lenders to accept the proposal. To do a Trust Deed based on £65,000 of debt the minimum payment over 4 years would be in the region of £250-£350 per month. If you had some equity and a Trust Deed was over 5 years then the payment could be a little less, perhaps around £200-£230 per month. I would say that these figures are based on a rough estimate and shouldn’t be taken as exact figures. I would need to speak with you and go over your budget to see what you would pay per month. If you had a high income then that could result in a higher payment per month to a plan.

On a Debt Arrangement Scheme (this is a plan whereby you pay back all of your debts) ideally this shouldn’t run longer than 10 years. To pay back your debts in 10 years the payment would be approx. £542 per month if you used the free advice sector to set this up.

If those level of payments on a Trust Deed or DAS are just too much then you may need to consider Sequestration (Bankruptcy). On this you only pay what you can afford to pay per month. Everyone always things that under a Sequestration they will automatically lose their house but this doesn’t work like that.

It probably takes me 10-15 minutes to go over a budget with a client and after that they then have an idea of what they would need to pay per month. Really in the space of a 25-30 minute phone call we are able to give someone a very good indication of what options they have available.

Can you tell me if you owe any money to Barclaycard or Nationwide? Reason I ask is some creditors on a Trust Deed can be a little difficult to deal with.

Hi Phoenix

It's impossible to say what you would have to pay towards a Trust Deed without going through your budget in more detail first. I'd be happy to do so, or I David, the other expert , could too.

As a very rough guide I would say that for the level of debt you have you would at least need to be able to manage around £250pm, though this is really looking at it the wrong way round and it is possible that you'd have to pay more than that depending on how your income and expenditure breaks down.

I think it is certainly fair to be paying towards the capital of the mortgage as long as it is worked out over a reasonable term. Does the lender provide some kind of suggested payment that includes something towards the capital too?

It sounds as though the equity level in the property might be low enough that it would not cause a significant problem, though there may need to be some level of extension to the trust deed to cover that. You should get a current redemption figure and we would get a valuation done without any cost to you to clarify this side of things.

Looks like David and I were typing at the same time - always good to see that our answers are pretty much the same when that happens!!

Thanks again David, yes I have credit card debt with Barclaycard, is that an issue? I'm interested to know more, I am working away this week but can I contact you next week?

Hi Phoenix,

How much do you owe to Barclaycard? If they have 1/3rd of your total debt they can object to the Trust Deed if they are unhappy with the proposal. This doesn’t mean that a Trust Deed wouldn’t work, it just means the proposal would need to be structured in a way in which Barclaycard would accept.

You can contact either Kevin or I by clicking the “contact me” button underneath our posts for direct 1 to 1 advice. Even if you are working away, if you have some spare time in the evening then we could speak with you. That way we can put your mind at ease in a quick 15-20 min phone call and you can start to relax a little bit and then perhaps organise a meeting with one of us for when you are back home.

Are you feeling any better about things and your situation now you have reached out for some help and advice?

Barclaycard is only 4000 of the total debt.

Yes feeling much better now that I have an idea of options. I will be in touch soon, thank you.

Ah oh that’s good then regarding the balance to Barclaycard.

Great that you’re feeling a little better about things.

We look forward to hearing from you and helping you become debt free.

Hi Phoenix

What is the situation with your mortgage payment then? I know you don't have to pay any more than the interest, but is there another amount that the mortgage lender suggests you pay each month?