Hi weakwilled and welcome to the forum.

I can see how this must be a very sensitive situation for you but I think you need to be very careful.

Borrowing money from a new lender, when you know you cannot pay them back, could have consequences you wouldn't possibly want to create. The subject has been discussed by the experts on the forum before and the feeling is that this could in certain circumstances be interpreted to be fraud.

The new lenders would also potentially be reluctant to accept a Trust Deed very soon after the money was borrowed and especially so if they knew that you were already aware that you could not repay the money.

Do you also have savings with the same credit union?

We do have savings but they are less than the loans. Also, my shares are not available to me as I was guarantor for my nephew who defaulted and is also now trust deed. However he hadn't realised how this would affect me so he now pays his credit union loan through me. I cannot get access to my shares until he has paid back a bit more of his debt.

Hi there

TDA is correct. All debts need to be included and any movement/additional borrowing of funds prior to the Trust Deed being signed would require to be investigated by the Trustee and possibly the creditor involved as you are entering into a fraudulent transaction. I would consider this a fairly serious area.

Also the Trustee could raise an action for unfair preference and have the money returned.

Mark

Okay, I'm too scared now to take this particular course of action! I just thought it was an option. Is it fraudulent not to mention the credit union loan if I approach a different advisor. Please don't think I'm being dodgy, I would really prefer not to include the community credit union into a trust deed - it wouldn't sit well with us.

Hi there

the answer is yes. It is a criminal offence to make a material misstatement. I understand that the Credit Unions regularly check the Ed Gazette notices as do some banks etc, so they would almost certainly end up being advised of the Trust Deed.

The reason I mention the above is that mis statements take matters into a whole new area from civil to criminal and I can only advise that you don't proceed along this route.

Mark

Mark
Thanks for the advice, I do appreciate it even if it gives me a whole new set of problems re how we get out of this mess! Including the Credit Union we owe accumulative approx ?ú33,000. Up until a few weeks ago I honesty thought the debt was nearer ?ú17,000. When I started looking to find a way out I found it was nearer ?ú27,000 and tried to get a consolidation loan to no avail. It would need to be a secured loan and we don't have enough equity to allow a loan that size. We don't miss payments and to date have not had any problems with loan or credit companies. However I finally recognised we will never be debt free if we keep going as we are. If Trust deed is not an option, what else would you suggest?

Hi weakwilled,

All of the generally available debt solutions (protected trust deed, bankruptcy, DAS Scheme and debt management plans for example) rely upon treating all creditors even-handedly. A failure to do so at the very least would be inappropriate and counterproductive to your goal of sorting out the problem, and at worst could constitute an offence.

You could try to find a unscrupulous debt solutions firm that will twist their presentation to allow you to proceed without including a certain debt (and do not disclose this to creditors) but if they're prepared to act in this way how do you expect them to treat you (and the money you're sending to them)?. I think everyone involved in this site would urge you not to take that path.

Is there a way to reduce expenditure and/or increase income to make the situation manageable? Is there a friend or family member who might help you?

Another option might be to sell your home to repay some or all of the debt and then rent a home. If you did this would your financial situation become manageable again?

If none of these things can be achieved, and your current payments cannot be maintained, the outcome may in the end be determined by someone other than yourself and without any control on your part. If this scenario were a real risk you may have to consider dealing with all of your creditors, including the credit union, via one of the solutions previously mentioned before it gets to that point.

I recognise that this will not be what you want to hear but we need to be frank in the advice provided to forum-members.

One final thought is that you might be surprised by the reaction of the persons operating the credit union. Everyone understands that debt is a major issue for people throughout the country. People involved in lending also know that for most people with unmanageable debt the situation has arisen through unpredictable changes in circumstances and/or honest mistakes rather than through any lapse in character or integrity.

Thanks. I am trying to take all of this information on board and realise I have the very difficult decision to make re the Credit Union. Unfortunately I'm probably heading for another restless night with little sleep! Basically I am in an all or nothing situation - if I continue to try to protect the Credit union then I cannot put an end to my current situation which although currently under control due to the fact my mortgage is lower due to being a tracker - this will change significantly when the interest rates go back up! O why o why did I let things get so bad!!
Thanks for advice given so far and I'm sure I will be back for more.

It must be very difficult.

If your debt repayments are currently affordable (thanks to the low mortgage repayment) is there a pressing need to take action now?

Are you trying to think things through for the future in advance of mortgage costs possibly going up again?

Yes, this is exactly what I am trying to do. Also, 1 of my credit cards in particular is giving me more reason for sleepless nights! The balance is just under ?ú9000 (I had switched other balances during a promotional period), I pay over ?ú200 per month and it just doesn't go down by much! At this rate I will forever be paying this credit card! Also, because I am making all payments it leaves us short in the month so invariabely we need to top up by using the cards for other monthly outgoings! It's the proverbial snowball! Really need to stop it growing!

Hi weakwilled,

If the overall debt level is increasing from month to month then it would seem that the current repayment amounts aren't affordable even with a low mortgage payment.

If that's the case, and you cannot sufficiently reduce expenditure or increase income to stop this spiral, it would seem that taking action soon would be in your best interests.

The alternative will be for the debts to continue to spiral. Sadly it's often the case that the longer a spiralling debt problem is left unchecked the less attractive the solutions can be.

I think TDA is right, weakwilled. From what you are saying, it seems you may be "robbing peter to pay paul" each month, which is a very easy trap to fall into. Unfortunately the debts tend to grow rather than reduce in this sort of situation and early action is usually advisable, whichever route you choose to go down.
I sympathise with you regarding the credit union, but maybe the reality of the situation wouldn't be as bad as you think - they certainly should not be discussing your financial details with anybody else. In the long run, it may be worth biting the bullet if you feel a trust deed is the most appropriate solution.