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Topic starter
02/11/2009 11:12 pm
This is a lengthy tale so please bear with me and my apologies if I ramble...
My wife and I found ourselves in financial difficulties, she had been a student and I was not earning huge amounts. We were never outrageous in our spending but were living just ahead of our means and so store/credit card interest and bank charges started to really pile up and take their toll. Although our income increased year on year we never seemed to be able to keep pace with the financial penalties imposed by our earlier overspending. Then the final blow came ÔÇô we had to move home for work and the sale of our first home fell through at the last minute. Stupidly, we gambled on finding another buyer quickly and went ahead with the purchase of the new property. We were then saddled with two mortgages for many months and ended up financially crippled. We tried consolidation loans but just could not keep up the payments so sought advice from the CAB. I know the CAB help many people but I think we were unlucky with the person we spoke to who was just awful She eventually put us in touch with a money advice company who suggested we remortgage and enter a trust deed. We thought this was the answer to our prayers.
We had roughly ?ú30K in debts each and realised about ?ú32K in equity from the re-mortgage. A meeting was set up with someone from a TD company and it was only during this meeting when the paperwork appeared that it became clear to us that there would be two separate TDs. All the calculations that had been done with the money advisor had been on the basis of all the debts being in the same basket. I became concerned at this point as about half of my debt was in the form of a single bank loan and I knew that if any creditor was owed more than a third of the total they could object to the TD becoming protected.
I was assured that there wouldn't be any problem as the bank in question ÔÇ£never opposed TD applicationsÔÇØ. We were also told that with the sort of money we were putting into our TDs we could expect the whole thing to be discharged early ÔÇô even within the year.
All the right leaflets were given to us and the perfunctory caveats uttered but the nod and wink was that we were home and dry. Of course, the inevitable happened. My wife's TD was protected alright but mine was not ÔÇô the bank that ÔÇ£never opposedÔÇØ TDs had objected. In the same phone call as being told this I was told the next step was to apply for sequestration. I was devasted. Sequestration was what I had been desperate to avoid from the outset. I felt cheated and a fool. To make matters worse, I then did what I have done in my financial past: I stuck my head in the sand and waited for it all to go away.
It hasn't gone away, of course, nearly three years on I am still in the same boat and the pressure on me to apply for sequestration has re-emerged. Where do I stand?
I want to find a way out of this without going bankrupt. I have asked the TD company to let me know how much I would have to raise from friends and family if I wanted to clear off the debt. They are going to get back to me but the woman I spoke to indicated it would be the full amount plus interest. That seems odd to me as before entering the TD I would be contacted by companies I owed money to suggesting that deals could be made whereby discounts would be offered for lump sum payments. Surely the Trustee could do a phone round of creditors and ascertain what they would accept.
I feel like I have had ?ú16K sitting in someone else's bank account for three years and I am worse off than ever.
03/11/2009 9:29 am
Hello OstrichNoMore,
I'm sorry that your Trust Deed did not go on to become protected. Were you given any reasons for the objection by the bank concerned?
To be told that a bank "never" objects to Trust Deeds seems to be a very strange statement. Good Trust Deed firms will know from experience the likelihood that a certain creditor will accept a Trust Deed but if there is a problem with the proposal (for example the firm is looking for too much in fees) the lender absolutely can and will object.
It would be normal for sequestration to follow a failed Trust Deed but I'd like to hear from our experts Kevin or Mark about whether there are other steps that can be taken from here......
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
03/11/2009 10:23 am
Hello OstrichNoMore
Firstly, well done for facing up to this - unfortunately these things don't usually just go away on their own and you are doing the right thing in being brave and trying to find a solution.
There is no imperative for you to apply for sequestration, despite the failure of your trust deed to gain protection. However, you should be aware that any creditors who objected to the trust deed at the start are unlikely to write off the outstanding debt at the end of the trust deed (though there is a small chance that they might - I've seen it happen!). There is no reason why the creditors who accepted the trust deed should not abide by this decision and write off the remaining debt to them once they receive their share of the funds from your trustee.
What is the reason that you are so opposed to sequestration? It may be worth considering - I certainly wouldn't dismiss it out of hand as it could be the most suitable solution for you. There wouldn't necessarily be a danger of losing your house - it depends whether there is any equity tied up in it, but given the way the housing market has performed in the last year or two maybe you would be ok?
Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.
Topic starter
03/11/2009 11:33 am
Thank you both very much indeed for your comments and for the time you have taken in considering my problems. More information from you in those two posts than in three years from my IP. I will attempt to answer the questions you have asked me (and pose a couple more of my own!).
TDA: I have never been told any specific reasons for the objection to my TD becoming protected. I presume that I can still ask for that information.
KM: The information in your second paragraph actually makes me feel much more secure. I am only a couple of months off the three year mark and I had no idea that the repayment offered to these firms three years ago might well still be accepted by them. Say that the credit card companies who had not objected to the TD accept the payment and write off the remainder but the bank does not, what would generally happen next? Presumably I would then have a reduced overall debt and only to one lender and I could negotiate directly with them about repayment terms. You asked why I am so opposed to sequestration and I understand the reason for your query, it does look on paper as though it would be my best option financially. However there are other factors that I am taking into account, the most significant of which is that I have ambitions in the future to stand for elected office; being bankrupt would prevent that ambition and being a discharged bankrupt would severely hinder it.
There is one further complicating issue: before taking out the TD, the local Housing Association carried out work to the exterior of the property (a four in a block in which one of the flats is tenanted and the other three owned, even if we had pressed it to a vote it would have been three to one and gone ahead anyway). We were not able to provide the IP with the sum that we would be charged as the final invoice had not been issued (there was some issue of how much VAT should be charged) but we did tell them about it. The HA are now vigorously pursuing that debt (around ?ú6K) and the IP says it has nothing to do with them.
03/11/2009 2:35 pm
Hello OstrichNoMore,
One point to clarify having read yours and Kevin's posts; did you make the Trust Deed payments after it failed to become protected?
You could ask your Trustee for the reason given, if any, by the creditor that raised an objection.
I'm not certain about the position with the Housing Association but would presume that if you were to enter another type of debt solution now that it could be included. Mark or Kevin may be able to confirm or deny this. I think you should look at whether this debt not being paid would raise any complications with regard to your home and/or ongoing relationship with the Housing Association.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
03/11/2009 6:11 pm
Hi Ostrich (great name)
Quite an interesting couple of points. Firstly the previous posts qoutline the points exactly. If creditors objected, then they can stay outwith the Trust Deed and continue with legal action etc. However thse agreeing would be bound.
On the subject of the HA. You would need to check to see if they registered a charge against the property. If so, then this would require to be paid as it would remain as a charge, if not, then it is a new debt.
So, could you in fact sign a Trust Deed to incorporate the HA and the creditor who did not accept the Trust Deed. if you could find out who objected, I'm sure Kevin or I could advise you of their current stance. However this opens up a newer issue. I assume you have not heard anything from the objecting creditor and if you don't in the next 2 years, then prescriptio applies and they would not be able to raise any action in recovery of the debt.
I hope this helps (a bit)
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
