I don't think this will work. It may be possible to setup the trust deed based on the lump sum payment (i'm not sure though) but it would almost certainly then run for the usual 3 years over which time you would be expected to pay in what you can. Will you not be able to work during this period? The only time that a TD can be 'Paid Off' is when payment is made in full. Perhaps bankruptcy would be a better option? the term over which you will be expected to contribute what you can would be reduced to a single year.

Welcome to the trust deed forum yoyo.

A trust deed funded by a lump sum only (because no monthly contributions are affordable) may well be possible.

With a formal offer constructed by an insolvency practitioner put on the table creditors may well accept it where an informal full and final settlement offer was previously rejected.

They may choose to accept such an offer partly because where a trust deed fails to become protected the individual will then often choose to become bankrupt; in which case the position of creditors is likely to be the same or worse than it would have been had they accepted the trust deed.

The cost of such a trust deed would depend on:
1 - What any trust deed firm chooses to offer to do the work for.
2 - Whether creditors accept their proposed fees as being fair.

Our experts Mark, Kevin and Shona will I'd imagine have worked on cases in some ways similar to this in the past. They'll be able to give you significantly more insight if you could let us have a little more information including:

1 - How much you currently owe.
2 - What size of lump sum you have available to you.
3 - Whether you a homeowner (with equity) or whether you have any other significant assets.

Hi,

Thanks for your quick replies.

I am able to work, however I've been unable to find a job over the last 4 years (I've been trying). My lack of employment is a key contributor to my debt and inabilty to service my debt.

I scrapped together £7,800 which I offered to 7 of my creditors. 3 creditors accepted my proposal and have been paid a total of £3,350.

This leaves £4,450 for the remaining 4 creditors with a total outstanding of £22,500. However to be honest there's a real danger of this £4,450 being eroded sooner rather than later ÔǪand shortly I won't be able to offer anything.

The offer above is still on the table, but all four creditors are currently rejecting it. For some reason they seem to change collection agency within a week or so of receiving my offer in writing.

Having read other posts in the forum, it seems that I would have to include ALL of my creditors. That's not something that I was doing when I put my own solution together (the solution above).

I had excluded one creditor on the basis that they clearly breached the terms of the Consumer Credit Act when they sold on a debt of around £13,000 ÔÇô they have also admitted in writing to overcharging me interest measured in £'0000s. In addition there are two lots of legal fees that are in dispute (with good reason) totalling around £10,000. Finally I guess there's also a bank overdraft of around £1,000.

I am a joint homeowner. There won't be much equity in the house as we bought at the top of the market, and my partner would argue that (as she can prove that what equity is there is hers), I personally have no equity in the house.

Hi again yoyo.

It may be possible to proceed with a trust deed, but it seems possible that it could be quite tight in terms of funding the trust deed fees/costs and a reasonable dividend for the creditors as well.

You are correct that all creditors will need to be included. How disputed debts would be treated is a matter you'd need to discuss in detail before choosing to go ahead. If the overall debt total increases following those discussions (which I think is likely) it may make it less likely that there will be sufficient money available to fund fees/costs and a dividend.

My understanding is that, unless you have legal documentation that proves otherwise, being a joint homeowner will mean that half of any equity in your home will be considered to be yours. You'll want to look into this side of things very closely before going ahead, though if there turns out not to be any equity the issue can be avoided.

If there is insufficient money to fund the fees/costs of a trust deed and a reasonable dividend to creditors it may be that it's worth looking at the sequestration route via a certificate for sequestration. This would to some extent bypass the issue of having to reach a minimum creditor dividend via a trust deed. However, the same caution about clarifying the position with your home in advance would apply.

As trust deed assistant says, the sum you have may not be enough to be able to get a protected trust deed agreed given the other creditors which may need to be added in and it may be that sequestration may be more suitable. Best to discuss in detail with an insolvency practitioner first though.

From what you have said, I think a Trust Deed is unlikely to be become protected. Without a face to face meeting, it is impossible to say for sure what is best for you, but I would suggest Sequestration may be more feasable for you. As long as a valuation is done before hand, and the equity situation established, the house may not be a big problem.

By the way, a short term Trust Deed is an option for people, it is just that you do not have sufficient funds.

what is a short term trust deed? Surely a td can't be short term unless the debts are paid in full.

Hi SkintAlly.

Normally a trust deed is based upon contributions from income, or sometimes from contributions from income and a lump sum (often related to equity in an asset).

There are a much smaller number of situations in which someone might have a lump sum available but little prospect of there being any disposable income.

An example might be someone who receives a lump sum on retirement, but who will not have any disposable income based upon their pension income.

In such a case an offer can be made to creditors using the lump sum alone.

There's no point in a case running on for years in this situation. It would just result in the fees of the Trustee being higher and greater delay for creditors in receiving a dividend.

Not a very common scenario but it can and does happen.

Thanks for your feedback.

Sounds like I need to have a face-to-face.

Before I do that I'll need to get some further info together. Let's assume for a moment that my creditors wouldn't accept my own personal valuation of our house. What kind of third party survey/valuation would they accept?

Hi yoyo.

Whether it's a protected trust deed, or sequestration, your Trustee will almost always be instructing the valuation of your home.

Valuations used for insolvencies are often a little lower than people expect because they are provided on the basis that the property needs to be sold quite quickly.

Thanks TDA. I'm a little confused, as you appear to be suggesting that (in terms of process) I wouldn't get a valuation on the house until after I get the Trust Deed ball rolling.

Surely I need to know what the valuation is in order to make the right choice in the first place?

That's a good point yoyo.

Many trust deed firms will be prepared to provide an indicative valuation to you in advance of going ahead.

Another possibility is to get the ball rolling with a firm and ask which valuers they use. They are likely to be happy for you to instruct this valuer to do a valuation which could also then be used as the formal valuation if you go ahead.

Hi all

I think it is wise to look at the valuation as priority.

In all cases, we get our surveyor chappy to have a look at the property and assess value. This is then confirmed in the post meeting letter. This way there is no doubt whatsoever on the position re the equity.

The above allows an individual the informed decision, in their own time, to look at the options. If there is no equity, then as far as I am concerned thats the end of the matter and its reported to creditors. If there is equity, then its agreed beforehand how this will be dealt with ie extra payments at the end.

The above takes away all the unknowns and provides a clear path forward.

Mark

We too would get any valuation done before sign-up, to avoid any unexpected surprises once it is too late!

If an individual has already had their own valuation done, then as long as it was from a reputable, fully-qualified chartered surveyor then we would accept it without the need for any further valuation.