Scottish Trust Deed

kev1980_2

Hi folks,

I have the following debt with the creditors below:

• Egg Loan £2467.00
• Liverpool Victoria £8000
• Lloyds TSB £17600.00
• RBS £8000
• Bank of Scotland C/C £1000
• Sky Credt Card £2400
• Bank of Scotland O/D £1700.00

= £41167.00

Mortgage Redemption Figure: £71000 approx
Valuation Estimate between £77k

Approx equity: £3500.00 once solicitors fees etc taken off.

At the moment I am using the CCCS and have a DMP set up and paying £300.00 per month and have come to the conclusion with the help of the CCCS that I am never going to be able to pay all this debt back through a DMP as some of the creditors are still charging interest.

I would like to go down the road of a Scottish Trust Deed and have had an initial meeting with KPMG in Glasgow (Very Helpful, recommended by CCCS)

The advisor at KPMG went through the details of the Trust Deed and advised me that as I have a mortgage I would need to release the equity in my home as a condition of the Trust Deed - KPMG are arranging for a surveryor to come out to the property to get a valuation done.

Once the valutation is done the advisor at KPMG said that the difference between the valuation and the mortgage redemption figure would equal the equity and would need to be paid either at the beginning of the trust deed or at the end.

Can I just ask how others view the idea of a trust deed based on my situation and any other comments you have.

Thanks.

GeorgeUK

There's not much info on trust deeds on this board - mostly IVA's which are the English equivalent. Might be worth looking at some of the IVA threads to see if there are similar queries.

Have you asked KPMG what happens at the end of the TD if the market has changed and there is no equity in the house by that time? (Just curious as to the answer)

kev1980_2

GeorgeUK wrote: »

There's not much info on trust deeds on this board - mostly IVA's which are the English equivalent. Might be worth looking at some of the IVA threads to see if there are similar queries.

Have you asked KPMG what happens at the end of the TD if the market has changed and there is no equity in the house by that time? (Just curious as to the answer)

The advisor I spoke to stated that the amount of equity would be agreed at the time of signing the trust deed and would remain the same throughout the term of 36 months.....

One of the questions i asked was "what if the value of my property increases over the 3 years will my creditors be looking for the extra equity and the answer was - No"

However, I never asked about what happens should the equity drop over the 3 years. I might just run this past him and see what he says.

Thanks for that.

CLAPTON

also ask whats happens if you can't remortgage to raise the money....

hugovendeen

What heppens in the trust deed situation if the house is in joint names and the partner is not involved in the debt?

rog2

Hi kev - whilst I hold CCCS in the highest esteem, I think that you may benefit from a second opinion, on this one.
Try National Debtline on 0808 808 4000 www.nationaldebtline.co.uk/scotland
or your local CAB.

Recent changes in Scottish Insolvency Laws, particularily in regard to bankruptcy, may mean that your options are a bit wider than you currently think, but you really do need professional advice.

I would be wary about entering into any contract which was dependent on 'raising equity' after three years. This is quite commonplace with the English 'IVA factories' and can result in enforced bankruptcy if the 'debtor' is unable to meet the IVA requirements.
I have no doubt that KPMG are any less than professional - especially if they have been reccomened by CCCS - an I do not, for one second, wish to infer that they are like the 'IVA Factories' in their approach to debtors. Equally, I am not 'au fait' with the new Scottish regulations, which is why I suggest that a 'second opinion' will do no harm.

Good luck

coolcait

Hiya

I'm not sure if you went to KPMG to discuss all of your options, or if you specifically asked about a Trust Deed. If you asked about all of your options, they should have told you about the Scottish Debt Arrangement Scheme, which is effectively like a DMP, but your creditors HAVE to freeze all interest fees and charges, and they are written off when you complete the payment programme. And while you're in a payment programme under DAS they can't - by law - make you pay any more than you've agreed to pay. Your home will be protected.

I have a very negative view of Trust Deeds. And the poster I'm about to link to had a very negative experience. However, several thousand trust deeds are signed each year, so I guess they do work for some people. Please bear that in mind as much as my own negativity! Here's one person's experience:

http://forums.moneysavingexpert.com/showthread.html?p=13425025#post13425025

The new Trust Deed regulations say that the trustee, and the debtor have to sign a statement saying that the debtor has been told - among other things - that granting a trust deed may mean that their house may be sold or they may have to move home. I hope KPMG have done so.

If you decide to enter the trust deed, I would strongly recommend that you get KPMG's assurances about the equity in writing, and take independent legal advice on those assurances before signing the trust deed.

If you have property you wouldn't be eligible for bankruptcy under the Low Income Low Asset route. And if you're in a DMP, you probably don't have any proof of apparent insolvency either. But, I guess that if you're looking at a Trust Deed, you're hoping to avoid bankruptcy? (sorry for the assumption, but it regularly comes up as a reason why people opt for a trust deed)

I would echo rog2's advice to seek a second opinion, and really can't urge you strongly enough to speak to a local authority or CAB money adviser - preferably one who is DAS approved. From the figures you've given you could do a DAS programme over 11 and a half years. It's just outside the informal 'upper limit' of 10 years - but the law itself doesn't put any limits on DAS.

Good luck!

kev1980_2

The main thing I have to do is insist or make sure that what ever figure of equity is given prior to signing the trust deed is written down and agreed not to change.

To give you some idea of where i'm at with the whole process please read below:

On Wednesday between 10am and 12pm KPMG have arranged for a surveyor to come down to my flat to put a value on it... I rekon its worth between £75k and £77k

I've spoke with Halifax to get my mortgage redemption figure and they have supplied me with it - £71,399.00

KPMG state that to work out the equity you have to take the valuation away from the redemption figure plus what reasonable costs would normally be inccured in selling a house in this case they state its around £2500.00

So lets say worse case scenario the surveryor comes down on Wednesday and tells me my flat is worth £77k

Value of property £77,000

Redemption Figure £71,399

What would be reasonable selling costs £2,500

= £3101.00 equity to find at the end of the three year trust deed.

Does anyone agree or disagree with anything above??

kev1980_2

Further Update......

Have spoke to KPMG today - Very helpful!

I have been advised that the equity figure agreed at the start of the trust deed does not change, it gets frozen and remains frozen for the entire term of the trust deed.

In England where they have an IVA the value of any property does get the revalued at the end of the IVA - This is where the Scottish Trust Deed is better as the figure of equity is frozen at the outset.

At the end of the trust deed so long as i have co-operated fully and have made all my monthly payments including the equity amount after the 36 months my outstanding debt is written off.

KPMG will only re value the property at the end of the trust deed if I fail to co-operate with them or refuse to make payments etc.... Also please note that not co-operating and not being able to pay should you lose your job are two different things.

All in all this is looking very promising, just hope my flat isn't worth more than i think as I want to keep my equity low for the purposes of the trust deed.

If anyone is thinking of a trust deed i do recommend you speak to KPMG - A very professional company and are fully recommended by CCCS and Payplan.

I'll keep you all up to date with how things go.

Taygal82

Just out of curiosity, surely KPMG have substantial fees, as one of the big four.

kev1980_2

Taygal82 wrote: »

Just out of curiosity, surely KPMG have substantial fees, as one of the big four.

KPMG will take their fees and costs incurred off at the end of the 36 months.

Whatever is left is then distributed as full and final settlement of any debts the outstanding amount is then written off.