Can I remortgage while in a Trust Deed / Sequestrated / DAS?
November 10, 2017
If you’re a homeowner in Scotland, and are experiencing high levels of debt, your property may be affected when you enter a formal debt relief procedure. This doesn’t necessarily mean you’ll need to sell your home, however – you may be able to remortgage to provide additional funds for your creditors.
If you have a regular monthly income, you may qualify for a remortgage despite your poor credit history. Here we look at the three main debt relief solutions in Scotland, and the likelihood of a remortgage being required.
Remortgages and trust deeds
When you’ve already taken out a mortgage on your home, or you own it outright, it’s likely your trustee will require you to release equity at the end of the trust deed term – generally four years.
As long as there’s sufficient equity available to make the transaction worthwhile, the money will be used to repay your creditors. Otherwise, you’ll have to extend the trust deed term by a further 12 months.
Can you remortgage your property if sequestrated?
When you’re sequestrated, your assets pass to the trustee who must sell them to achieve the highest possible return for creditors. In the case of your home, the trustee generally aims to help you stay there if possible.
Being in sequestration severely limits your ability to obtain any form of borrowing, but if the property is jointly-owned, the joint owner may be in a position to remortgage in their sole name, effectively purchasing your share of the property.
In some cases, family or friends may wish to invest in property, and be able to buy you out with a view to renting it back to you. They receive an income from their investment, and you can continue to live in the property.
Remortgaging under the Debt Arrangement Scheme (DAS)
The Debt Arrangement Scheme differs from sequestration and Scottish trust deeds in that you repay your debts in full, but over a longer term. Although DAS doesn’t involve formal insolvency, the procedure does negatively affect your credit rating.
So if you decide to remortgage, any current remortgage deals will be out of reach. There are lenders who specialise in remortgages for people with bad credit, however. This generally involves paying a higher rate of interest, or agreeing to other generally unfavourable terms when compared with a ‘standard’ remortgage.
Scotland Debt Solutions can provide further advice on remortgaging whilst in a trust deed, sequestration, or DAS. We work from four offices around Scotland, and will arrange a free same-day meeting to discuss your situation.
If you’re worried that the council might take action against you for non-payment of council tax, entering into a Scottish trust deed can be a beneficial step. It stops legal action by all creditors included in the arrangement, and provides a ‘safe haven’ from which to regain control of your finances. As council tax arrears […]
A debt payment programme (DPP) remains on your credit file for six years, along with other default markers and court judgments that have been made against you. This can seriously affect your ability to borrow for this period of time, and longer. Even if you can secure borrowing, lenders are only likely to offer unfavourable […]
If you owe a debt of £5,000 or less, your creditor may send you a Simple Procedure Notice of Claim. This is a relatively new procedure that was brought in by the Scottish government and commenced on 28th November 2016 – their intention being to make it easier to resolve debt disputes. So if you’ve […]
A Bankruptcy Restriction Order may be made against you if it’s believed that you acted dishonestly, recklessly or unlawfully before you were made bankrupt, or during your bankruptcy. Your Trustee will inform the Accountant in Bankruptcy (AiB), and if their suspicions are upheld, a BRO of 2-15 years can be made depending on the seriousness […]
Debt payment programmes (DPPs) are an intrinsic part of the Debt Arrangement Scheme, which allows you to pay off unsecured debt at an affordable rate. If a debt payment programme is rejected by one or more creditors, the DAS Administrator can apply their discretion on whether to approve the plan, after using a test to […]
If you’re struggling to pay your unsecured debts, a debt payment programme could help you to regain control of the situation, and become financially stable again. Debt payment programmes are a fundamental part of the Debt Arrangement Scheme (DAS) in Scotland, and allow you to repay over a longer period of time. These programmes involve […]