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[Ilford]

Hi
Would it be advisable to contact the 3 unsecured creditors first to say i'll be defaulting on thier monthly payments or just let the inevitable happen?
Will this default help my application for a Trust Deed?
(asking as I've never defaulted on anything before!)

Lastly (or I should say firstly) one credit card has approx £500 left to spend on it - would I be advised to forget about it and cut up the card now or think about using it for emergency purchases before the Trust Deed application goes in the post?
Thanks

[Hayden]

Hi there Ilford,

When I was going through the same process (a few years ago now) I simply defaulted on the payments without giving the creditors any prior warning. If it make you feel any better, then there i nothing to stop you warning them. However, I can tell you for certain that it will not make any difference in the way they treat you after that. Whether you warn them or not, they are still going to send you collection letters and call you demanding payment until you get the debts sorted with your Trust Deed. The actual default itself will help as it will clearly show that you are unable to continue to make your normal payments.

In terms of the available balance you have on your card. My suggestion would be to draw this out as cash and keep it aside for emergencies.

Do you owe money to your current bank? If so you need to open a new bank account with a bank where you do not owe anything before starting yourb Trust Deed application.

[Amy Jellings]

Hello Ilford.

If you intend to start a trust deed there will come a point at which you cease paying your creditors directly and you pay into the trust deed itself instead.

My suggestion would simply be to take the advice of the trust deed provider on this matter as part of their advice process before signing. Follow their guidance and you should be fine.

I don't agree with Hayden that defaulting will help you; the evidence is that it makes no difference as creditors will review each case based upon the evidence provided by the Trustee.

I suspect they will not encourage you to contact creditors prior to signing the trust deed. It will take five weeks for it to (all being well) become a protected trust deed. If you tell your creditors you cannot pay (and will not pay) some time before that five week period even begins, you're opening a window during which they could choose to start legal action from which you will not be protected.

On balance using the credit card in the run-up to signing a trust deed is unlikely to be helpful for you. I'd suggest avoiding it other than for essential cost-of-living purchases and then only if it's impossible to pay using cash. I completely disagree with Hayden's advice to withdraw cash from the credit card at this point if you genuinely intend to go ahead with the trust deed soon.

Hayden and I would certainly agree that starting work on getting a new bank account if required is an essential move, one that you may wish to make some progress with soon so that it doesn't end up hindering progress with a trust deed later.