Hi Jewliesmith and welcome to the forum,

When you met with the person who collected your paperwork did they spend any time explaining about all of your options i.e. a Trust Deed, Sequestration or Debt Arrangement Scheme?

Also, did they explain fully how a Trust Deed works? It sounds like from the questions you have asked that they maybe didn't and all they did was collect paperwork.

A Trust Deed is just a repayment plan whereby you make a monthly payment for 48 months. Your payment per month is calculated by going through a very thorough income and expenditure with a qualified expert to work out exactly how much you could afford to pay per month.

When calculating your income and expenditure we have guidelines that we work with called the common financial statement. These are figures which determine how much you are allowed to spend per month on things like Phone, Housekeeping, Travel and Other Expenditure.

You are allowed to have a standard of living and continue with life as you would normally. That means you are allowed to spend money on things like the gym, haircuts, birthdays & Christmas, hobbies, sports and leisure etc.

The Trustee (person who is responsible for your Trust Deed) doesn't control your bank account. You are required to provide 3 months bank statements when you sign a Trust Deed but this is to verify your bills. Also on an annual basis you will need to carry out a review of your I&E and again you could be asked to provide bank statements but this is just to verify your bills.

The most important thing (and I can't stress this enough) when setting up a Trust Deed or any plan is to ensure that an accurate income and expenditure has been completed that takes account of everything you spend money on. If you don't do this and rush into something then the payment could be unaffordable and lead to problems later on down the line. This is why it's key to sit down with a qualified expert and discuss things.

If set up correctly and for the right reasons the a Trust Deed can be a very effective way of clearing an unmanageable amount of debt.

The positive thing to remember is that you do have solutions available to help you.

I can understand your worries, Julie, it is a big step and of course you are right to consider what effect it might have on your daughter. There are plenty of people visit this forum that have been in exactly the same position as you are now and who I am sure will be willing to share their experiences of the process with you.

I doubt any of them will tell you it is a piece of cake, but I think the vast majority would say that it is a lot better than the alternative of struggling on and trying to repay their debts over a long period of time.

The amount you are required to pay should be set at a reasonable level that you can afford - after your expenditure requirements have been accounted for, including stuff like gym and leisure activities. Of course there are limits though, and your budget for things like holidays is likely to be very restricted.

I presume you are finding it a struggle to cope with your debt payments just now? If so, then is the alternative to a Trust deed going to be any better, or wouldn't you just be forced to live on a tight budget anyway in order to meet your debt payments? At least this way you know that the debts will be clear in 4 years and then you can spend your money on whatever you want.

There's never any harm in getting a second opinion, so if you would like one of the experts here to run through your income and expenditure needs with you then feel free to get in touch. We'd be able to let you know whether the budget you are happy with is likely to be acceptable to creditors.

Jewliesmith, I make my last payment tomorrow and I have to say if your well advised at the start it is a huge relief and a weight of your shoulders.The thing I found most inspiring was that there was a date that you know you will be debt free all going to plan.

Another benefit I have found is that you realise that you can live within your means when you need to and it's given me a whole new perspective regarding my finances,it's not been easy but it's been far better than the umpteen years of worrying daily I had previously.

Obviously I am in no position to advise you on your situation just thought I would share my experience so far

Hello jewliesmith and welcome.

You certainly have much to think about so that you make an informed decision which you look back upon positively.

With thanks for Arabali's considered comments already, I wonder if some more of our members/posters might share their experiences of financial life before, during, and after a trust deed (good and bad)...

Hi Jewliesmith!

I can only tell you my experience but hopefully it can offer perspective.

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Originally posted by jewliesmith
[br]I just worry that my life will now be living by the trust deed laws - I have a small daughter and I feel so worried about living on the edge for 4 years of her early little life which makes me feel like she won't really have much of a life if I can only afford to feed her and not much else.

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During my trust deed and the initial expenditure exercise my TD contact encouraged me to consider all outgoings - he called it "full cost consideration". What he meant by that was I was to take into account the small things like haircuts, family birthdays (modest gifts), Christmas etc. We prepared a budget that I would live from and it was up to me to stick to it. It didn't feel over controlling and I actually had more disposable income than when I was struggling to pay my debts.

A good example of this was my "clothing" budget. Everyone is entitled to it but I don't buy much clothes so I could spend this on pretty much whatever I needed to that month.

quote:

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Originally posted by jewliesmith
[br] Can someone please please please help me, what kind of life style do you have and are entitled to whilst on the trust deed? Are you able to rent a house whilst on one and will it affect any future jobs? What kind of control did the trust deed have over your bank and disposable income?

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My trustee never had any control over my bank or disposable income. The amount I paid monthly was calculated using the "full cost consideration" method I mentioned above. That meant that I had money to live, and whatever was left went to my TD. My trustee never had any reason to suspect I was "fudging the numbers" during the reviews. In fact my payments went up when I moved in with my GF and my outgoings halved.

My lifestyle was better than when I was struggling with debt; but it wasn't extravagant. And it shouldn't have been.

I found there was more to life than money. I could sleep better, I could answer the phone and answer the door without fear. I had a bit more money in my pocket than when I was struggling to pay debt.

I was successful in renting a flat through a letting agent. Still live there today having never missed a rent payment. I needed a guarantor though.

In short, it CAN affect your job prospects, but only if you work in an industry that's financially regulated. I've just been through my own blip with Police Scotland but my TD is now off my file.

I never felt that my T D company had control of my finances as such; we still holidayed but not lavishly and if anything we saved money - we never did that before to be honest.

Thanks for taking the time to share your experience ScotsLad and tinsoldier. I'm sure your feedback will help.

I think the most important part and from what you have described in your post that speaking with a qualified advisor who does take into consideration absolutely everything is the best way forward. That way it will ensure that the payment per month is affordable and sustainable. A good expert will also take into consideration future changes such as children finishing full time education resulting in a benefit reduction which can have an impact on the payments.

A lot of my clients tell me that adjusting to the Trust Deed in the first couple of months can be difficult and the thought of having no credit to rely on can be daunting but once they learn to work within their budget they actually find that have a little more money left over than when they weren't in a Trust Deed as you have advised.

Rushing into a Trust Deed can lead to problems later on down the line. If you take your time jewliessmith and speak with an expert you should be fine.

It is a common misconception that a trustee takes control of someone's bank account in someone. This doesn't happen at all.

There is a requirement for an annual review, at which point your trustee is likely to want to see recent bank statements to check that whether main fixed outgoings (ie DDs for household bills) have changed. However, you are still control of your own money and budgeting throughout the process.