Hello @Sa1976, could you email support@amifinancialsolutions.com with your full mobile number please. It hasn't come through in the messages.

Thanks

AMI

Hi Sa1976,

To answer your queries in order:

1 - Yes, provided the debt existed at the date you granted the Trust Deed. Successfully completing a Trust Deed will sever your liability (including contingent liabilities) for any debts owed at the date you granted your Trust Deed. Should the PG be called up during the term of the Trust Deed, the creditor will be able to submit a claim and receive a dividend.

2 - There is no such thing as a blacklist, it will not impact your address at all. Your partner will be unaffected, unless any of the debts are jointly owed or your partner is a guarantor for one of your debts. In the case of joint debts, the history of this account will show on both credit files (this is not applicable for things that do not appear on credit files, e.g. HMRC / DWP / Council Tax debts). For clarity, your partner would remain liable for the full balance of any jointly owed debt. In the case of guarantor debts, your partner's liability will be called up and this may impact their credit file or affordability. It will also impact your ability to apply for joint credit items, such as mortgages, until it has left your credit file.

3 - This could amount to fraud and you should tread very carefully here. The party who paid off your last debt is now your creditor. You are essentially suggesting obtaining credit with no intention of repaying it, in order to treat a connected party preferentially. I would strongly advise against this; the person who took out the 0% card and paid off your debt can rank as a creditor in the TD and receive a dividend.

To answer your specific query, it is very possible that such a creditor would object to protected status, however even if they did not, your liability for this debt may not be discharged as a TD will not discharge liability for debts obtained fraudulently. It could also lead to a claim against the connected party who was treated preferentially.

Hope this answers your queries

NM

Many thanks for your reply @nm89 - really appreciate the time taken to reply with such detail.  

On point 3 - definitely no intended fraud on my part.  The debt is all mine.  The payments connected to the card all come from my bank account etc.  Would this still be viewed in this way if i can prove the debt was/is mine and I have been paying it?

Many thanks. 

I completely appreciate that fraud is not the intent, however when we break down the position, there isn't much of a way around it.

When Party A paid off one of your debts with their 0% card, they entered a finance agreement with a creditor where they took responsibility for that amount of money. Whilst it was ultimately to benefit you, they have incurred a liability for which they are now responsible for - you are not. You are now liable to Party A for the sums they advanced to you.

What you are ultimately suggesting is, whilst aware you are practically insolvent, you intend to borrow sums from a new lender, knowing you cannot and will not repay them.

Unfortunately, that would require a fraudulent representation as part of the application for credit.

Party A can rank as a creditor in the Trust Deed and receive dividend payments. You could theoretically make that party whole again after the expiry of the Trust Deed term, but you definitely should not obtain new borrowing to repay them just now.

Hi - sorry I am late to this thread (been on leave for a week).  Looks like nm89 has done a great job of answering your queries anyway though and I wouldn't disagree with anything they have said.

Thank you, both.  I am now considering a self-managed DMP.  Is it possible to enter a TD if the DMP doesn’t get accepted or is too expensive to maintain?  I want to try my best to repay all the debt.  

Thanks again 🙂 

@sa1976 A DMP is one route, though be aware your creditors can move the goalposts if they wish and can continue to apply interest. You might want to consider DAS, as it binds your creditors and freezes interest. Your friend who lent you money can still claim in the DAS and they would receive a monthly payment towards the debt from your payment distributor.

With either a DMP or a DAS, if you find the payments unmanageable and wish to grant a TD or apply for sequestration, you are perfectly free to do so.

@nm89 Thanks again. I so appreciate your advice and prompt responses.  You’ve got no idea how much. 

I have considered a DAS, however, was under the impression that it was far more rigid rules wise?  But, just in case I am wrong:

- As my income fluctuates, I would be looking to set the DMP to a fairly low (reasonable) monthly payment, one that I am confident that, even on a quieter month, I will be able to maintain.  However, on my better months, I can then split the cash and fairly overpay my creditors.  Whereas, on a DAS, this would require formal reviews and need to declare all extra money and do it through my advisor?  Just feels DMP gives more control, is more straight forward and less hassle in this respect as this could be a monthly requirement. 

- My name and address will appear on the insolvency register on a DAS for 6 years?

- If I were to run into any financial difficulty, I would easily be able to request a payment break/lower monthly payments for a period until I recovered by commincating directly with my creditors.  Can this also be done and accepted in a DAS?  

- From my reading of other people’s experience on DMPs, as the debt is repaid, even though credit file is affected, they do see improvements year on year?  Is this the same on a DAS?

- Again, from my reading, it is not unusual after a few years to be able to offer full and final settlements on your debts and for these to be written off early.  Is this also available on a DAS?

Thanks again! 🙂 

@sa1976 Happy to answer these on a general level, though I would recommend picking up with a money advisor and discussing your specific circumstances, to make sure you get the best advice possible.

DAS is a lot less rigid than you may think, though if you did fall behind on payments it can be revoked. That said, with a DMP creditors are free to move the goalposts / start legal action whenever they wish, so if you fell behind on payments in a self managed DMP, the consequences would be similar.

Income: Before entering any debt solution (formal or informal) you should conduct a review of your income and expenditure and identify what you can reasonably afford to commit in the average month. If your income fluctuates, taking an average over 12 months might be a sensible idea. With DAS, you can then choose to commit the full amount of your average disposable income, or a portion thereof. For example, someone may have a disposable income of £200, but wish to only commit £150 to cover for fluctuations, unexpected bills etc... Your full DI will be shown to creditors, alongside the proposed repayment, so they will consider whether they believe this to be a fair proposal. In the event you can afford to pay more, it is up to you whether you do this. My advice is always to do this as "ad-hoc" payments, instead of varying the DAS. 

To summarise: You can make larger payments if and when you have the cash, without a formal review, or changing the terms of the DAS.

Insolvency Register: Your details will not be on the Insolvency Register, but they will be on the DAS register. This is a similar register and is still publicly searchable, but it is harder to search (unlike the ROI where you can search postcodes and see everyone in that area who is currently insolvent, DAS register requires you to search First name, last name and postcode to get specific result).

Your details will appear on the register for the duration of your DAS. If your DAS lasts more than six years, then your details will remain on the register during this time. If your DAS lasts less than six years, your details are removed shortly after completion / termination.

It will remain on your credit file for six years from when it began, or its duration, whichever is longer.

Payment breaks: DAS has some pretty decent payment break stipulations and this is possible. It's been a while since I worked on one, so I'd recommend asking a specific money advisor about their current policies and the statutory position etc...

Credit files: My advice is always to take "credit file" advice with a pinch of salt. There is actually no objective credit scoring metric in the UK. Each lender has their own criteria, and most lenders will have a scale of criteria for their different products. A DMP will not show formally on your credit file, but your accounts will show special arrangement status and the balance will be coming down disproportionately to the payment, so any underwriter worth their salt will spot it easily. You should also declare this in most applications for credit. DAS will show formally.

Both DAS and DMP will result in you repaying your debt in full and monthly reductions in the outstanding balance.

Both DAS and DMP (even if self managed) will have a negative impact on your ability to obtain credit, as fewer lenders will be willing to lend. The terms you are able to borrow on may also be less favourable (for example, higher interest). That said, if you were to miss payments, end up with defaults etc... this would also have a negative impact and shrink your pool of lenders, even if you are not in a debt solution.

Full and Final - As mentioned above, I've not worked on DAS for some time so don't want to overcommit here. This is no formal mechanism for this, to my knowledge, however if you are using a good money advisor, with the knowledge and the time to liaise with your creditors, I believe there have been success stories here. Maybe one for @kevin-mapstone to pick up on

Thanks @nm89 - that has really clarified things and now making me re-think that DAS maybe the better option after all….

Thanks - i would be interested to hear re the F + F settlements as it seems most folk in DMP either get offered or offer a F + F settlement deal a few years down the line with sometimes a 30-50% reduction depending on the balance.  

How quickly is a DAS set up and monthly payments can be stopped with new reduced monthly payment in place please?

Again, some excellent information from nm89. 

DAS is certainly much more flexible than you think and is designed to be able to work around any temporary difficulties that you might have in making payments.  For example it is easy to get a "crisis break" where your payment is suspended for 1 month and this can be done up to twice in any 12 month period.  Additionally for more major issues, where your disposable income is dropping significantly for several months, a longer payment break (up to six months) can be sought.

The ability to take further credit is rather restricted when in a DAS debt payment plan (DPP) as the intention is that people shouldn't be taking further debt when they are still paying down their previous debts, though it is allowed to some degree.

Full and final settlements are certainly possible and I have arranged these for clients on several occasions.  The main difference when you are in a DAS is that they must be agreed and paid via your DAS plan as it is not permitted to make payments to creditors outwith the arrangement and your DPP could be revoked if you do this.

It often takes around 6-7 weeks to get a DAS DPP approved, though it can be much shorter depending on who your creditors are. 

Happy to speak with you directly about this if you would like?  Just click the "Contact Kevin" button below if so.

Thanks, @kevin-mapstone.  Really helpful.  I have sent a message.