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paparazzi
New Member
6 Posts |
 Posted - 04 January 2010 : 22:57:23
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Hi There,
I am swimming in the sea of TD confusion and would really appreciate some advice.
Basically my wife and I are in a really tough spot and are talking with the National Debt Line at the moment to try to get some options. We have a mortgage with no equity and about 58k of unsecured debt spread through store cards and credit cards.
Most of it is mine with the exception of a joint personal loan of 15k and the mortgage which has an unsecured element as part of it as well through Northern Rock.
My wife and i were doing ok until we adopted our beautiful little girl and my wife took adoption leave from her work and was made redundant while she was away. She was able to get some level of payout which lasted about 6 months but this has long since run, out and she has been struggling to find another job for 18 months as the financial sector market is dead in Scotland....long story.
So here we are with just me earning at the moment and I am unable to pay all the bills on my salary alone. Things went south in December so we are now about 2 months in arrears in most of our accounts etc. The phones are constantly ringing and we are very, very stressed as this is affecting our little girl and our home life.
So we have been advised to look at a Trust Deed but as my wife has not been affected too much yet and still has a clean credit file and that she works in financial services, we don't want her to be affected. mainly because I don't feel that it is fair to pull her down for me being a big spender and running up the debts. Also I would not be able to live with myself if I did something to ruin her career.
So the questions I have after all of that is:
-Can I get a PTD for myself and pay a portion of the joint loan in the TD and my wife pay the balance from her salary (She has a second interview in the next few days so will hopefully be earning soon)? This would mean that the account is paid and my wife's credit will be kept intact.
-I have a commission element to my salary which is not guaranteed, will all these amounts be taken away from me when they are earned? I accept that this may pay off the debts sooner but it would be nice to be able to pay for a family holiday and treat the family based on these payments.
Lot of stuff here but would love your thoughts.
Thanks
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Trust Deed Assistant
Trust Deed Expert
6759 Posts |
Posted - 04 January 2010 : 23:47:55
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Hello paparazzi and welcome to the Scottish Trust Deed forum. I'm sorry to hear that you are having a confusing and stressful time at the moment.
I'll comment on some of your general points and also ask for a couple of extra details. I'm sure some of our Trust Deed experts will then follow up with further information about how their firms might look at your case that may be useful to you.
Would I be correct in saying that you have a Northern Rock "Together" mortgage? Could you confirm how much the unsecured element of this debt is?
After you have covered all of the essentials (mortgage (excluding the unsecured element), council tax, utility bills, food, travel etc) how much do you feel might be left over that you can afford to pay towards the debts each month?
You can enter a Scottish Trust Deed without your wife doing so. The joint loans will be subject to "joint and several liability". This means that your wife would become responsible for the full repayments in the event that you entered a Trust Deed (though any payments from the Trust Deed would be taken from the balance due from your wife).
This may not be manageable unless your wife finds work and has sufficient disposable income based upon her earnings to manage the payments on these joint commitments herself.
A significant number of people who enter Trust Deeds do work in the financial services sector so, depending on the roles that she is looking for, this may not be an insurmountable issue for her in terms of her career if you conclude that this is the way to proceed.
In terms of your commission pay different Trust Deed firms seem to treat this in different ways. Some will allow you to keep a percentage of this money to provide an incentive for you to earn as much as possible and hence repay more of the debts via the Trust Deed. Other visitors to this forum have told us they have to hand over the full amount of any additional earnings. Choosing the right firm will be important if you proceed; get this and any other points that are important to you clarified in writing before you ever sign a Trust Deed.
A final thought is that I'm not aware that National DebtLine actually provide Scottish Trust Deeds themselves and I therefore assume that they will refer clients to a firm in this market if they conclude it is the best way forwards.
You may wish to speak directly with a firm (or firms) in this market so that you can directly go through the detail of your case to understand how everything will be dealt with if you decide this is the best way forwards for you.
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*** Qualified Debt Adviser & Trust Deed Forum Administrator ***   |
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paparazzi
New Member
6 Posts |
Posted - 05 January 2010 : 09:47:04
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Hey there,
Thanks for your prompt reply and the great forum.
To answer some of your questions:
Our mortgage is the NR Together mortgage and the unsecured element is about 29k at the moment. We have just changed the payment plan from repayment to interest only for 12 months which is the longest period that NR allow. This has dropped our mortgage from 1787 to 1306 monthly. The normal payment is absolutely crippling as it is a lot to pay for a 196k house so its not even a mansion.
I ran through the essential costs etc through the National Debt Line budget sheet which deducts all the essentials from your income and shows what is left for the creditors. Due to the fact that I am the main earner at this stage, I have to take the full mortgage payment and most of the food and childcare etc. My wife has just started on a 8 week contract which should earn her about 1600 per month. This ends at the end of Feb though and hopefully she will get the perm job that she is applying for.
Based on my calculation on essentials including an HP car agreement I have about 450 left for creditors but have only taken half the childcare and food costs into account otherwise I would be in a negative figure.
Does this answer your questions?
Also further to my previous mail, will Northern Rock be happy to make a deal on the unsecured element and not raise our interest rate on the mortgage? I would probably propose as this is also joint that between my wife and I we pay the full unsecured element to protect her credit file?
Also if we ever want to sell the house and perhaps make some profit, how would that be split as the house is jointly owned so would my wife get a share that would not have to be lost to repay the creditors?
Thanks again.
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Edited by - paparazzi on 05 January 2010 10:29:41 |
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Julie Heaton
Trust Deed Expert
252 Posts |
Posted - 05 January 2010 : 10:47:26
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Welcome to the forum Steve, hopefully we will be able to give you some advice that will point you in the right direction.
Like Trust Deed Assistant has said we will require some additional information from you to make sure that we are giving you the best advice possible.
I note that you have a ‘Together’ mortgage with Northern Rock. If you were to sign a Trust Deed the unsecured proportion of this debt would be included in the Trust Deed. This may well change the ‘equity’ position in your house. You have valued your house at £196K, do you know what the value of your mortgage is (excluding the unsecured element)?
It is important that you find this out before you make any decisions as if there is equity in the house this would require to be ingathered for the benefit of your creditors.
I would also like to make you aware that if you were to sign a Trust Deed the joint loan and the ‘unsecured’ proportion of the mortgage would require to be met by your wife. As Trust Deed Assistant states your wife would have to have sufficient disposable income to be able to meet this commitment.
Once your wife gets a permanent job she should also consider looking at some form of debt relief. I would point out that we have clients with various jobs in the financial services who have signed Trust Deeds. The important thing is to read over the contract of employment or speak to a human resources representative.
I note that you receive commission, which is not guaranteed. The way our firm deal with this is by allowing you to retain 50% of the net sum received, therefore both you are your creditors benefit from this.
If your wife was able to maintain the full payments on the unsecured proportion of the Northern Rock Loan I would think that the interest rate would remain the same for the mortgage. If I’m honest however I’m not sure how the interest rate, on the mortgage, would be affected if your wife reached an agreement to make a reduced payment to the ‘unsecured’ proportion.
If the house was to be sold whilst you were in a Trust Deed, 50% of any net free proceeds would require to be paid towards your Trust Deed estate.
I hope this has made things a bit clearer for you Steve, however if you require any further information please do not hesitate to contact me.
Julie
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Trust Deed company representative. To contact me about starting a Trust Deed:  |
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Mark McFadyen
Trust Deed Expert
3000 Posts |
Posted - 05 January 2010 : 10:51:08
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Hi paparazzi
On the 2 points you mention, you would be unable to make payment from your income to the Northern Rock debt as they would be a creditor under the Trust Deed and the responsibility for payment would fall to your wife. Best idea would be for her to agree token payments until her work position improves.
On the bonus front, You should have this agreed with your Trustee beforehand and agree a percentage of any bonus as this can vary dramatically.
On the property front, if the house were to be sold, then a Trustee could only seek your half of any equity.
Hope this helps
Mark |
*** Recommended Trust-Deed.co.uk Partner ***Click for Mark’s help starting a protected trust deed:  |
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Kevin Mapstone
Trust Deed Expert
1871 Posts |
Posted - 05 January 2010 : 11:00:26
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Hi paparazzi - hopefully the replies here can help lift some of the confusion for you.
Just to reiterate a couple of points which the trust deed assistant answered:
- you can sign a Protected Trust Deed without your wife having to do the same, though the joint debts would still need to be paid in full and there may well be an issue of affordability if your wife is not working.
- Commission has to be taken into account, though you should be able to keep a proportion of it - there has to be some incentive for you to go out and try hard to earn the commission.
You also asked about the profit from any house sale. The answer is that if your house is jointly owned, then half of any profit would be payable to each of you, with your half having to go into the trust deed. However, if the sale is after you are discharged then your trustee would have no claim on any of the funds.
It is difficult to give best advice on individual cases in this kind of forum because a lot of complex information must be gathered and assessed first - especially when there is a property and another party involved. Please feel free to get in touch with me or one of the other experts on this site if you would like us to take a closer look at your specific situation. I realise National Debtline are doing this too, but it never hurts to get a second opinion I feel. |
*** Recommended Trust-Deed.co.uk Partner *** Click for Kevin’s help starting a Scottish trust deed:  |
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Kevin Mapstone
Trust Deed Expert
1871 Posts |
Posted - 05 January 2010 : 11:02:00
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Looks like all 3 experts were posting replies at the same time for you here paparazzi.
I'm glad to see that we all seem to be in agreement!! |
*** Recommended Trust-Deed.co.uk Partner *** Click for Kevin’s help starting a Scottish trust deed: |
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paparazzi
New Member
6 Posts |
Posted - 05 January 2010 : 11:55:23
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Thanks for all the advice guys.
On what basis is the payback amount calculated? i.e. if I owe 60k lets say, will the IP offer a percentage of this to all the creditors over the 36 months. Or will the monthly amount be based on affordability after the essentials are deducted?
Also what is the best thing to do from here, who is the best company to speak to to get tailored advice and set up the TD. National Debtline recommends Grant Thornton as they do not charge a fee but I am happy to deal with a reputable company that will look after our best interests. I just want to stay away from being sold something by a newspaper agency if you know what I mean.
Thanks again.
P |
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Trust Deed Assistant
Trust Deed Expert
6759 Posts |
Posted - 05 January 2010 : 12:44:55
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Hi paparazzi,
The amount that you would pay would be based on the amount that you can afford to pay.
Similarly to Grant Thornton none of the firms featured on this site charge an upfront fee. If the advice offered to you on this thread by any of the experts featured here appeals to you they can be contacted via the link in their forum signature.
There is also more information about them and their firms available via the links on the menu to the left of this page.
Best wishes with everything whichever route you choose and please let us know how you get on. |
*** Qualified Debt Adviser & Trust Deed Forum Administrator *** |
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Mark McFadyen
Trust Deed Expert
3000 Posts |
Posted - 05 January 2010 : 13:46:45
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Hi paparazzi
TDA is correct, the contribution should always be based on what is affordable. The worst thing that you can do is agree a payment and then realise you are unable to maintain this a bit further down the line.
As I always say, the Trust Deed should be there to solve a problem and not create another one.
Mark |
*** Recommended Trust-Deed.co.uk Partner ***Click for Mark’s help starting a protected trust deed: |
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