Need Help to Understand Scottish Trust Deeds

Miss_Poohs

Can someone please explain how they work to me, as I keep hearing various versions.

The situation is -

My husband has been on a DAS now for 4 yrs with another at least 8 yrs to go.

He still owes in the region of £45000 to £50000.

He jointly owns a house with his elderly mother which has been her home or over 40 yrs, she's in her late 80s.

He has a secured loan on the property - originally for £45000 (not part of the DAS) taken out about 10/11 yrs ago, his mother is guarantor for the loan, and he has always paid it.

I have tried to offer full and final payments on his DAS debts but we've received letters back from his creditors saying they can't accept because he's in a DAS :undecided

Keeping up the DAS payments is killing him - hes in his late 50s, and looking to see if there are any alternative ways of dealing with his debt.

Thank you in advance for any replies.

Miss P

Anondebtadvisor

Hi Miss p

If your husband was to enter into a Trust deed he would make monthly payments usually for 36 months and will be required to release his share of any equity from the jointly owned property.

He would need to consider how he could release equity given that a remortgage will be difficult if not impossible to obtain while in a Trust deed.

How much equity do you think there is in that property? on a quick sale valuation?

Miss_Poohs

That's the thing Anon we're not entirely sure.

I reckon the house would sell in the current market for approx £80000 - £85000, but hubs isn't sure how much is left on the secured loan!!

Sticking my neck out I'd say there would be a healthy bit of equity there.

I don't want my mil worrying she's goin to end up homeless though - she's 86 and it's her home, and no way would he want to cause her any upset.

Is it possible in a scottish td not to lose your property? Being that it's not his home but his mothers?

Thanks for your reply.

monday_blues

Hi Miss Poohs, have spoke to you on the debt free wanabee board, after researching the das we found ourserves going for a 2nd opinion and were told that the trust deed would be an alternative as would be out the other side quicker. I am no expert, but from what i gather the valuation used is a forced sale price which isnt open market value, it is between 60-70% of open market value. so if valued at 100k would be more like 70-75k for forced sale. Therefore you might find there's not as much equity as you thought. Even if there is a bit of equity, mortgage redemption penalties can be deducted off the equity amount, as can sales fees ie estate agent and solicitors selling fees i.e say 5k off for that. The thing I found when looking at das was that if you were repaying say over 8years, add another 6 years to the end before you will be considered for credit, remortgage etc. Whereas they apply the defaults with the trust deed at the start so 6 years and it could be over, albeit both have impacts on your future credit worthiness, but should be able to start living your life quicker with TD, certainly, in my experience. Don't get me wrong, am far from out the woods yet, still very much at the beginning, but that's a bit of info from me.... Good luck,

Miss_Poohs

Hi MB - great to hear you're getting sorted, you have to do whats right for your own situation.

My husband already has defaults on his debts they've been there since the DAS was taken out 4 yrs ago.

The problem my hubs has is selling his house really isn't an option as his mum still lives there and owns half so it's not his to sell.

He's looking increasingly trapped - he's learnt his lesson from this one.

Anondebtadvisor

MB is right the valuation used will be quick sale minus selling and legal costs, but it looks like there will still be a fair amount of equity?

If this is the case and you enter into a TD, if you cannot release the equity the trustee can get an order for sale or agree to extend the trust deed in leiu of equity which could result in the trust deed lasting as long as the DAS.

Could you come out of the DAS and remortagage and then do a short settlement? The risk is that the DAS fails and if you need to do another the creditors might not accept it again.

Alternativley contact your DAS administrator and reduce payments obviously this will extend the period of time for the debts to be cleared.

Miss_Poohs

I tried to offer full and finals to his creditors but they say they won't/can't accept any offers because of the DAS, but if he comes out of the DAS then the creditors can then add on all previously frozen interest and charges!!

Rock and hard place eh?

National_Debtline

Hello Miss Poohs.

If the property is your Husband's 'sole of main residence' it is possible to have a Trust Deed and have the property completly excluded. This is known as a 'section 10 Trust Deed'

In principle you may find that the creditors will not agree to the Trust Deed if there is a great deal of equity.

The alternative option is to see if he amend the payments under the DAS by seeking a review of his instalments.

Best wishes,

National Debtline.

Miss_Poohs

Thank you NDR - he's terrified a TD could have repercussions for his mum, so I think the only way forward is to review the DAS and ask for a variation.

Is it accurate that a full and final offer isn't an option on a DAS? Would it be more favourable to the creditors if it was offered through Think Link who administer the DAS?