Trust Deed / Protected Trust Deed Or Debt Arrangement Scheme

boabsy

New to the board so be gentle with me!

I have a telephone interview with the CCCS tomorrow as I've finally admitted to needing help. Hoping to get the ball rolling in one way or another with them.

During my many sleepless nights I've been trawling the internet and I think the best solution for me is either a Trust Deed or a Debt Arrangement Scheme. The Trust Deed appeals to me as it would be over in 3 years, the only thing I'm not clear about is the equity part from my property. I probably have approx. £10K equity at the moment but I would like to keep this, however if I understand things correctly, at the end of a Trust Deed I have to remortgage and raise this amount to give to creditors. Is that correct?

The Debt Arrangement Scheme is my other option which although a much longer process is I believe one which the creditors favour.

Could anyone on the board tell me approximately what I should expect to pay per month for a debt of £30K on a Trust Deed and a Debt Arrangement Scheme???

Never_Ever_Again

Hi Boabsy
First of all welcome aboard!
I'm not sure about a DAS, but with a Trust Deed the best thing to do would be to deal with the equity in your property at the start of a TD as you will have to pay this to your IP at the end of the term. The amount you will pay varies from person to person as it is dependant on how much you can afford to pay each month.
I hope this is of some help

feisty1

boabsy...........regarding yr monthly payments for a DAS..........DAS advisers are guided by BBA target figures (link below) so it is all worked out on disposable income) if you want anymore info on DAS, feel free to PM me or post here....

http://www.hmrc.gov.uk/manuals/dmbmanual/DMBM800120.htm

coolcait

boabsy wrote: »

New to the board so be gentle with me!

I have a telephone interview with the CCCS tomorrow as I've finally admitted to needing help. Hoping to get the ball rolling in one way or another with them.

During my many sleepless nights I've been trawling the internet and I think the best solution for me is either a Trust Deed or a Debt Arrangement Scheme. The Trust Deed appeals to me as it would be over in 3 years, the only thing I'm not clear about is the equity part from my property. I probably have approx. £10K equity at the moment but I would like to keep this, however if I understand things correctly, at the end of a Trust Deed I have to remortgage and raise this amount to give to creditors. Is that correct?

The Debt Arrangement Scheme is my other option which although a much longer process is I believe one which the creditors favour.

Could anyone on the board tell me approximately what I should expect to pay per month for a debt of £30K on a Trust Deed and a Debt Arrangement Scheme???

Hiya boabsy and welcome

I'm glad to hear that you'e already got an appointment with CCCS - I hope you find it helpful in sorting out your options.

I'd be very surprised to learn that creditors prefer DAS - I usually get the impression that most of them know nothing about it! :rotfl: I tend to think it's a better option than a Trust Deed though (where it will work), so be aware of my bias .

Like Never Ever Again says, it's impossible to know how much a Trustee would expect you to pay into a Trust deed - that will depend on how much surplus income he thinks you have each month. Do you have a rough idea how much that would be? Even better, have you done an SOA? http://forums.moneysavingexpert.com/showthread.html?t=107280

If you opt for a trust deed, the Trustee WILL want the equity in your property as well as the contributions you make each month. All of the money will go into a pot, and the first thing that comes out of it is the trustee's fees and expenses. Those fees are generally about £3,000-4,000, but can be more.

You also have to remember that a trust deed is a form of personal insolvency. If it doesn't become 'protected' (if enough of your creditors object to it) then you could be made bankrupt. It will also be recorded on the Register of Insolvencies.

Most Trust Deeds only last three years, but there is no automatic discharge. If your trustee does not discharge you, the trust deed will stay open.

As for DAS, you may already have read more than I can tell you (there's not that much about it on the net - compared to trust deeds and bankruptcy anyway!). But this site covers most of it www.moneyscotland.gov.uk

If you're accepted onto DAS you will get a lot of the advantages of a trust deed (protection from creditors, freezing of interest) without being insolvent. The downside is that it will still affect your credit record for some time, and it will usually last longer. You may also pay more to DAs than to a trust deed - but it's hard to be absolutely certain about that. You could pay just as much into a trust deed, but see less going towards your actual debt.

Anyway, those are my thoughts - I hope you got something from it.

Good luck tomorrow!

kev1980_2

Hi boabsy,

Welcome to the board and I hope you find some of the help and advice useful.

Coolcait has given you a detailed reply below and its all excellent advice.

If its of any help to you i'm already in a Trust Deed which has just become "protected"

If I can help you with any questions then feel free to ask.

HTH

coolcait

Hiya again boabsy

At the risk of sounding like a mutual appreciation society, I'd also suggest that you read kev's threads . He looked into DAS and Trust Deeds in a lot of detail before he made his decision. A Trust Deed turned out to be the right thing for him - and maybe it will be the right thing for you too. But you'll find a lot of info - pros and cons - on those threads, which might help you when you're deciding for yourself.


(Just in case there's any misunderstanding here - Kev, I do appreciate you!! Don't ever think I don't!)

kev1980_2

coolcait wrote: »

Hiya again boabsy

At the risk of sounding like a mutual appreciation society, I'd also suggest that you read kev's threads . He looked into DAS and Trust Deeds in a lot of detail before he made his decision. A Trust Deed turned out to be the right thing for him - and maybe it will be the right thing for you too. But you'll find a lot of info - pros and cons - on those threads, which might help you when you're deciding for yourself.


(Just in case there's any misunderstanding here - Kev, I do appreciate you!! Don't ever think I don't!)

Team Work!! :beer:

JK11

boabsy wrote: »

New to the board so be gentle with me!

I have a telephone interview with the CCCS tomorrow as I've finally admitted to needing help. Hoping to get the ball rolling in one way or another with them.

During my many sleepless nights I've been trawling the internet and I think the best solution for me is either a Trust Deed or a Debt Arrangement Scheme. The Trust Deed appeals to me as it would be over in 3 years, the only thing I'm not clear about is the equity part from my property. I probably have approx. £10K equity at the moment but I would like to keep this, however if I understand things correctly, at the end of a Trust Deed I have to remortgage and raise this amount to give to creditors. Is that correct?

The Debt Arrangement Scheme is my other option which although a much longer process is I believe one which the creditors favour.

Could anyone on the board tell me approximately what I should expect to pay per month for a debt of £30K on a Trust Deed and a Debt Arrangement Scheme???

Hi

Difficult to answer your questions without some more information first. I know a little about DAS from what I have read over the last year or so, but know quite a lot about trust deeds. My girlfriend finished one a while back and it has been a godsend to us. we were quite lucky because she only had a little bit of equity in her property so it was pretty straightforward to deal with.

SPeaking of equity, one thing it is definitely worth checking is what actually IS the equity in your property? House prices are falling just now and if you think you have 10 equity, it may well turn out you have less. Trustees take the redemption figure for your mortgage into account (that includes any early repayment penalty you might currently have with your mortgage). My girlfriends trustee also took into account how much it would cost if she was to sell her property and factored that into his calculation for equity as well. So, what I am trying to say, is that although you may think you have 10k of equity just now, in actual fact, as far as a trust deed is concerned, you may have less.

You definitely would need to deal with the equity, but most trustees are pretty happy to establish the equity position at the start and then let you raise that amount at the end. alternatively if it was a pretty small amount, could it be possible that someone could buy out the equity for you (family, friend?). Anyway, best to discuss all the options for equity with CCCS, they are good and they know what they are doing. They gave us contact details for a couple of companies who specialise in trust deeds.

With DAS the length of time it takes to complete will depend entirely upon how much you can afford to pay each month and what the total debt is. With a trust deed, you are usually looking at 3 yrs only, unless the amount you can pay in is very small compared to the total debt, in which case it can last a little longer.

To answer the question how much should you pay into either trust deed or DAS, we can't give you any guidance. You need to work out how much money you have cominig in each month, how much you spend on normal day to day living and whatever is left over is the amount you should pay into your DAS or trust deed. If you do indeed have 10k of equity in your house and you can afford to pay off your debts in full in five or six years or less, then it would be worth looking more closely at DAS and not having to involve your property at all. If the equity actually works out less than 10k and it is going to take you a long time to pay off your debts in full, then the trust deed may be the more viable option.

One other thing to note - I have read quite a few posts which seem to imply that your credit rating will be far better with DAS than it would be with trust deed. This is not necessarily correct. Whenever you default on your original credit agreement with a bank (credit card, loan, overdraft etc), a default will be recorded on your file. Indeed, as long as your payments are less than the contractual amount, your file will be updated as showing that you are not keeping to your contractual payments. My understanding is that throughout a DAS payment programme, this will still be the case. Information is usually on your credit file for six years, so lets say you complete a DAS which takes six years, then the fact that you have defaulted on your payments will be on there for TWELVE years. With a trust deed, the trust deed is recorded after the trust deed is granted, no further update tends to happen and then the trust deed should be removed from the file after six years. So yes, whilst a trust deed is a form of insolvency, it is unlikely to be any more drastic to your credit file than DAS would be, indeed, it could prove to be far better for your file in the medium to long term.

Which option the creditors find more favourable is probably not much of an issue to be honest. Once a trust deed become protected, it is legally binding on all the creditors (as far as I can tell, the vast majority do become protected no problem as long as you are able to give a minimum amount back to the creditors at the end of the trust deed) and likewise once a DAS gets approved, as long as you keep to the terms of it, it is legally binding on the creditors too. Although creditors tend to get paid more back in DAS, it does take an awfully lot longer time to do it. Likewise, it's more of a costly exercise for them, because they need to keep the account active during the entire repayment period whereas with trust deed, they just sit back, wait for their payment at the end, and then close the file.

Hope the above is helpful. I don't tend to post very often on forums, but when I do, I find it hard to only post short messages!

If you want any more information, particularly about the trust deed and how it affects your property, then please just ask. The moneyscotland.gov website which is mentioned in a post above is also very good for giving information about DAS.

Finally, and most importantly, all of us debt free wannabees have got our own opinions which are based on our experiences and information we have learned from others. Nothing however beats the advice of experts, so talk at lenght at your CCCS appointment and don't be afraid to ask questions - thats what they are there for!

All the best.

kev1980_2

JK11 wrote: »

Hi

Difficult to answer your questions without some more information first. I know a little about DAS from what I have read over the last year or so, but know quite a lot about trust deeds. My girlfriend finished one a while back and it has been a godsend to us. we were quite lucky because she only had a little bit of equity in her property so it was pretty straightforward to deal with.

SPeaking of equity, one thing it is definitely worth checking is what actually IS the equity in your property? House prices are falling just now and if you think you have 10 equity, it may well turn out you have less. Trustees take the redemption figure for your mortgage into account (that includes any early repayment penalty you might currently have with your mortgage). My girlfriends trustee also took into account how much it would cost if she was to sell her property and factored that into his calculation for equity as well. So, what I am trying to say, is that although you may think you have 10k of equity just now, in actual fact, as far as a trust deed is concerned, you may have less.

You definitely would need to deal with the equity, but most trustees are pretty happy to establish the equity position at the start and then let you raise that amount at the end. alternatively if it was a pretty small amount, could it be possible that someone could buy out the equity for you (family, friend?). Anyway, best to discuss all the options for equity with CCCS, they are good and they know what they are doing. They gave us contact details for a couple of companies who specialise in trust deeds.

With DAS the length of time it takes to complete will depend entirely upon how much you can afford to pay each month and what the total debt is. With a trust deed, you are usually looking at 3 yrs only, unless the amount you can pay in is very small compared to the total debt, in which case it can last a little longer.

To answer the question how much should you pay into either trust deed or DAS, we can't give you any guidance. You need to work out how much money you have cominig in each month, how much you spend on normal day to day living and whatever is left over is the amount you should pay into your DAS or trust deed. If you do indeed have 10k of equity in your house and you can afford to pay off your debts in full in five or six years or less, then it would be worth looking more closely at DAS and not having to involve your property at all. If the equity actually works out less than 10k and it is going to take you a long time to pay off your debts in full, then the trust deed may be the more viable option.

One other thing to note - I have read quite a few posts which seem to imply that your credit rating will be far better with DAS than it would be with trust deed. This is not necessarily correct. Whenever you default on your original credit agreement with a bank (credit card, loan, overdraft etc), a default will be recorded on your file. Indeed, as long as your payments are less than the contractual amount, your file will be updated as showing that you are not keeping to your contractual payments. My understanding is that throughout a DAS payment programme, this will still be the case. Information is usually on your credit file for six years, so lets say you complete a DAS which takes six years, then the fact that you have defaulted on your payments will be on there for TWELVE years. With a trust deed, the trust deed is recorded after the trust deed is granted, no further update tends to happen and then the trust deed should be removed from the file after six years. So yes, whilst a trust deed is a form of insolvency, it is unlikely to be any more drastic to your credit file than DAS would be, indeed, it could prove to be far better for your file in the medium to long term.

Which option the creditors find more favourable is probably not much of an issue to be honest. Once a trust deed become protected, it is legally binding on all the creditors (as far as I can tell, the vast majority do become protected no problem as long as you are able to give a minimum amount back to the creditors at the end of the trust deed) and likewise once a DAS gets approved, as long as you keep to the terms of it, it is legally binding on the creditors too. Although creditors tend to get paid more back in DAS, it does take an awfully lot longer time to do it. Likewise, it's more of a costly exercise for them, because they need to keep the account active during the entire repayment period whereas with trust deed, they just sit back, wait for their payment at the end, and then close the file.

Hope the above is helpful. I don't tend to post very often on forums, but when I do, I find it hard to only post short messages!

If you want any more information, particularly about the trust deed and how it affects your property, then please just ask. The moneyscotland.gov website which is mentioned in a post above is also very good for giving information about DAS.

Finally, and most importantly, all of us debt free wannabees have got our own opinions which are based on our experiences and information we have learned from others. Nothing however beats the advice of experts, so talk at lenght at your CCCS appointment and don't be afraid to ask questions - thats what they are there for!

All the best.

Hi,

I'm in a Trust Deed at the moment which has just become protected.

I just wanted to say that was a brilliant post you wrote above!!! :money:

Well Done!

coolcait

JK11 wrote: »

Hi

Difficult to answer your questions without some more information first. I know a little about DAS from what I have read over the last year or so, but know quite a lot about trust deeds. My girlfriend finished one a while back and it has been a godsend to us. we were quite lucky because she only had a little bit of equity in her property so it was pretty straightforward to deal with.

SPeaking of equity, one thing it is definitely worth checking is what actually IS the equity in your property? House prices are falling just now and if you think you have 10 equity, it may well turn out you have less. Trustees take the redemption figure for your mortgage into account (that includes any early repayment penalty you might currently have with your mortgage). My girlfriends trustee also took into account how much it would cost if she was to sell her property and factored that into his calculation for equity as well. So, what I am trying to say, is that although you may think you have 10k of equity just now, in actual fact, as far as a trust deed is concerned, you may have less.

You definitely would need to deal with the equity, but most trustees are pretty happy to establish the equity position at the start and then let you raise that amount at the end. alternatively if it was a pretty small amount, could it be possible that someone could buy out the equity for you (family, friend?). Anyway, best to discuss all the options for equity with CCCS, they are good and they know what they are doing. They gave us contact details for a couple of companies who specialise in trust deeds.

With DAS the length of time it takes to complete will depend entirely upon how much you can afford to pay each month and what the total debt is. With a trust deed, you are usually looking at 3 yrs only, unless the amount you can pay in is very small compared to the total debt, in which case it can last a little longer.

To answer the question how much should you pay into either trust deed or DAS, we can't give you any guidance. You need to work out how much money you have cominig in each month, how much you spend on normal day to day living and whatever is left over is the amount you should pay into your DAS or trust deed. If you do indeed have 10k of equity in your house and you can afford to pay off your debts in full in five or six years or less, then it would be worth looking more closely at DAS and not having to involve your property at all. If the equity actually works out less than 10k and it is going to take you a long time to pay off your debts in full, then the trust deed may be the more viable option.

One other thing to note - I have read quite a few posts which seem to imply that your credit rating will be far better with DAS than it would be with trust deed. This is not necessarily correct. Whenever you default on your original credit agreement with a bank (credit card, loan, overdraft etc), a default will be recorded on your file. Indeed, as long as your payments are less than the contractual amount, your file will be updated as showing that you are not keeping to your contractual payments. My understanding is that throughout a DAS payment programme, this will still be the case. Information is usually on your credit file for six years, so lets say you complete a DAS which takes six years, then the fact that you have defaulted on your payments will be on there for TWELVE years. With a trust deed, the trust deed is recorded after the trust deed is granted, no further update tends to happen and then the trust deed should be removed from the file after six years. So yes, whilst a trust deed is a form of insolvency, it is unlikely to be any more drastic to your credit file than DAS would be, indeed, it could prove to be far better for your file in the medium to long term.

Which option the creditors find more favourable is probably not much of an issue to be honest. Once a trust deed become protected, it is legally binding on all the creditors (as far as I can tell, the vast majority do become protected no problem as long as you are able to give a minimum amount back to the creditors at the end of the trust deed) and likewise once a DAS gets approved, as long as you keep to the terms of it, it is legally binding on the creditors too. Although creditors tend to get paid more back in DAS, it does take an awfully lot longer time to do it. Likewise, it's more of a costly exercise for them, because they need to keep the account active during the entire repayment period whereas with trust deed, they just sit back, wait for their payment at the end, and then close the file.

Hope the above is helpful. I don't tend to post very often on forums, but when I do, I find it hard to only post short messages!

If you want any more information, particularly about the trust deed and how it affects your property, then please just ask. The moneyscotland.gov website which is mentioned in a post above is also very good for giving information about DAS.

Finally, and most importantly, all of us debt free wannabees have got our own opinions which are based on our experiences and information we have learned from others. Nothing however beats the advice of experts, so talk at lenght at your CCCS appointment and don't be afraid to ask questions - thats what they are there for!

All the best.

Hiya JK

A Guid New Year to you, and I hope all is well with you, your family, and the little one who's on the way:beer:

As you say, we all have our own opinions, based on our own experiences. Your own experience -through your OH - was that at some point in the five years after she signed a Trust Deed the two of you had a mortgage together. So that was even quicker than the timescale you set out. It can happen, and it can happen with DAS - and even BR. That's why I personally tend not to set a definite timescale on how long a person's credit record will be affected by DAS, BR or Trust Deeds. Especially when the majority of the debt is owed to a council rather than a credit-giving organisation.

The majority of trust deeds last three years, but there is no automatic discharge. There have been posts on this forum from people whose Trust Deeds have lasted longer than five years - not because they have failed to make their payments, but because the Trustee is carrying out further investigations - not necessarily because of anything that the poster has done (sorry if that's cryptic, but I've already had a long post removed because it - tangentially - referred to an issue which is mentioned in more detail on the site feedback board).

The long-term implications of insolvency can be about more than simply credit rating. When applying for some jobs, insurance, credit etc, you may be asked if you have ever been personally insolvent (not necessarily in those words). If you have signed a Trust Deed, and answer that question honestly, you will have to say 'yes'. This could rule you out of some jobs, for example.

As long as people are aware of all that, and take it into account when deciding whether to not to go for a Trust Deed, then all is well and good. They know the potential risks and drawbacks, and have weighed those up against the advantages for them.

The problems arise with those who fall for the line that they will be 'debt-free in three years', without looking at any of the potential complications. Thankfully, the law has been beefed up so that Insolvency Practitioners are supposed to spell out at least some of the potential complications.