Trust Deed Forum - Self employed, very low income, tax credits, 30k
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 Self employed, very low income, tax credits, 30k
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Katamari
New Member

4 Posts

Posted - 02 August 2017 :  13:02:22  Show Profile  Reply with Quote
Hello all.

I've lurked around this fine forum for many years (mainly to help my mum with PPI which in another story she was very successful with even after having it taken from her due to a long ended Protected Trust Deed).

Anyway, I digress - I'm increasingly worried about my own debt, all on 3 credit cards, nearly 30k or thereabouts.

I've been playing Peter and Paul for years, doing the credit card shuffle but it's really getting on top of me now and it's becoming unsustainable.

I am self employed (sole trader working from our rented home) however business has slowed considerably in the last year or 2, I'll be lucky to clear 100 profit a month after expenses so we rely on Working Tax Credits of around 390 a month, plus Child Tax Credits of 730 and Child Benefit of 200 - those two in my wife's name (however my wife's accounts are all separate, all the debt is in my name - we don't share any financial products).

I'm at the stage now where I'm not sleeping well and I feel I'm just about hanging onto my sanity, I'm running out of options to juggle balance transfers at 3% transfer rates and then it's only interest free for 12 months or so and then I'm on the merry-go-round again until I eventually get hit with whopping interest rates. I thought about getting a 15k loan, got offered one at 9.2% so that would be another 3.6k of debt just to prolong the agony.

It's time to hold my hands up I think.

Just wondering if anyone can tell me if they think, with such a poor income before benefits, I would be accepted for a Protected Trust Deed?

TDA (Debt Adviser)
Trust Deed Expert



12026 Posts

Posted - 02 August 2017 :  13:13:47  Show Profile  Reply with Quote
Welcome to the forum Katamari.

I'm sorry to hear that you're struggling financially at the moment.

There are perhaps two important issues to consider at this stage in respect of whether a trust deed might be a good route.

Firstly is whether making any kind of payment towards your debts is realistically affordable. That means whether there is anything left over after you have covered all of your general household bills and expenses (excluding debt repayments) every month.

Secondly any contribution that you make towards the debts will be limited to your private income. So, if you earn 100 per month, then the most you'd be able to pay towards the debts is likely to be 100. Money shouldn't be taken from benefits and other similar sources of income.

Would 100 per month be enough to have a good chance of being accepted by your creditors? Trust deed providers (including the firms represented here by Kevin & David) should be able to give you a pretty clear indication because they know the acceptance criteria used by the major creditor organizations.

It's also important to bear in mind that a trust deed is by no means the only option necessarily, and that other options might appear to be a better fit for your needs once an adviser has worked through everything with you.

It may be useful if you could share with us which firms you owe money to currently and how much to each.

Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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Katamari
New Member

4 Posts

Posted - 02 August 2017 :  13:23:58  Show Profile  Reply with Quote
Thanks so much for the quick reply.

When we take into account our household spending, food and bills are covered by the benefits - any extra currently goes to the minimum payments on the cards, plus a little extra if we can afford it - we are left skint every month.

I take your point about the private income - it does fluctuate, but I reckon I may make a profit of around 1000-1500 this tax year, last year it was next to nothing though.

The money is owed as follows (approximately, I haven't looked at the exact figures in a while through fear and dread!):

MBNA - 13k
Barclaycard - 9k
Halifax - 6k
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Kevin Mapstone
Trust Deed Expert



3381 Posts

Posted - 02 August 2017 :  14:58:05  Show Profile  Reply with Quote
Hi Katamari

One thing is for sure - unless you anticipate a major improvement in your circumstances before too long then you really need to do something before you lose control of the situation. I often think the hardest part is acknowledging the problem and reaching out for help, which you have now done so it should get easier from here on in!

Myself or David would be happy to go through you your situation with you in a little more detail to see what options might be available to you. I wouldn't rule anything in or out at the moment based on what you have told us already, a trust deed may or may not be viable, but it is definitely worth looking at as an option.

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Edited by - Kevin Mapstone on 02 August 2017 16:19:10
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Katamari
New Member

4 Posts

Posted - 02 August 2017 :  16:47:13  Show Profile  Reply with Quote
Hi, thanks for the advice.

Now that I've had the balls to look at my debt I'm in two minds whether to plug along for now to see whether I can show more profit in my self employment. I have had to account for a fair bit of tools and machinery I needed over the last year or so and that I claimed for under the Annual Investment Allowance and once I have paid for that back out of the business account I will have more of a concrete monthly income. Looking over my accounts for the last few months it will be hard to show any profit at all.

I've been trying to cut my business expenses by moving phone and broadband providers etc (expenses that in my line of work I can claim for fully). Also my car expenses are fully covered every month as I use the 45p per business mile scheme (and my car doesn't cost 45p per mile to run luckily enough).

What are the other options available at this stage where lets say I have next to no personal income, certainly far less than 100 a month that I initially estimated and am obviously relying on the tax credit system? I certainly see sequestration as the very last option.

I'm also looking at this 15K loan I've been offered as a large breathing space, keep the wolf from the door so to speak. Then I could try to tackle whittling down the other 12K month by month - all the debt is still interest free and I could probably shuffle my way around for another couple of years wasting only money on balance transfer fees and the big whack on the loan interest - however I don't have enough credit to shuffle the whole lot. This would really be my last chance at sorting this the "proper" way.

Looking over my/our finances and with some severe belt buckling it doesn't seem totally insurmountable. I could probably whittle our essentials down to 400 a month (or less). Believe it or not I'm quite frugal in other ways, I've just let this easy credit get one over on me over the last few years. Obviously the problem is that the tax credits cannot be counted as income when applying for a trust deed.

I just wonder what the other options might be?
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TDA (Debt Adviser)
Trust Deed Expert



12026 Posts

Posted - 02 August 2017 :  18:05:28  Show Profile  Reply with Quote
Hi Katamari,

I think the best thing to do now would be to take debt advice.

You'll find out what your options are right now, which will enable you to make an informed decision about whether now is the time to enter into any particular debt solution.

You'll also find out what your options will be if you wait and improve your income. This would enable you to make an informed decision about whether now is the best time to act.

In both cases you'll be able to dig further into the pros and cons of all of the debt solutions. For example, sequestration very often isn't anywhere near as worrying a prospect as people assume. For many people it can be a much better and cheaper route than struggling through some type of repayment solution that they can barely afford.

Finally, you'll be able to establish whether the repayment amount for this 15,000 loan you're considering is actually affordable after you've covered all of your bills and expenses. If it isn't, then I think every professional adviser within our industry would tell you not to go there.


Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds    
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Katamari
New Member

4 Posts

Posted - 02 August 2017 :  19:47:10  Show Profile  Reply with Quote
OK, thanks again, obviously I've a lot to think about. I'll get in touch with one of the debt advice agencies.
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Kevin Mapstone
Trust Deed Expert



3381 Posts

Posted - 03 August 2017 :  08:16:15  Show Profile  Reply with Quote
I would always advise against taking out further unaffordable debt as a means of trying to stay on top of a debt problem. It rarely makes sense and is only likely to deepen your problems in the long run.
Are you operating via a limited company? If so then you couldn't continue to be a director if you go bankrupt. Also, do you own any assets?
Depending on what agency you approach, you might find you are passed on again to an insolvency practitioner like ourselves, or to Business Debtline, as many agencies are not comfortable with advising in trading situations.

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