Scottish Trust Deed Question

WorkInProgress

Hi all,

I've been lurking on the board for a while, trying to get as much info as possible in a bid to solve my debt problems.
I've got an appointment with a council money advisor in a couple of weeks and I will be discussing both a DAS (Debt Arrangement Scheme) or a Trust Deed.

Regardsing the Trust Deed, I've got a NR Together mortgage and my worry is that when the unsecured portion is included into the Trust Deed, there will possibly be about £10 - 15K equity in the property. Now, I know I have a bit of a cheek wanting to try and hang on to the equity but I was wondering if anyone can explain exactly how the equity is handled. I know it can be agreed that the equity is taken into account and an equivalent sum must be raised at the end of the Trust Deed (I don't have the option to have a friend or family member purchase the equity - if that is indeed what can happen) but I have seen some posters mention a £500 fee to buy out the Trustee's interest in the equity. Is this correct or I have I picked up this wrongly.

I'll keep you all posted on how I get on but I can't find any info on the above question and it's driving me mad.

elaine77

Hi there, sorry I dont know the answer to your question, just thought i would bump it up for you.

I have to say though I found the money advice team at my local trading standards office a fantastic help. They are so knowledgable and non judgemental they really helped me find a solution to my problem. I am also in Scotland
Good Luck!

Pammybun

Hi

I am sorry to say that in Scotland under the terms of a Trust Deed you are required to release any equity in your house and that it is your Trustees duty to help you to realise this either through some miracle good fairy coming along and giving you the equity money or, sadly by selling your house. There is no "one off" payment that you can make unfortunately.

However there is a wee bit of light for you as a Trustee can also try and arrange for you to remortgage your house to get any equity out at the end of your Trust Deed - I am assuming you own the house on your own. If it is a joint mortgage then the simple thing would be for your partner to remortgage to buy out your share of the equity (£7,500 on total equity of £15000.). Even as a sole owner then this may be possible in light of the current downturn in the market.

It is important that you keep up your mortgage repayments as Trust Deeds do not protect your house from being repossessed (if you fail to make mortgage payments).

I hope this helps.

Pam

WorkInProgress

Thanks Pam,

I'm a sole owner. Am I right in thinking the equity can be paid at the start if by some miracle I can get someone to stump up the money for me? And the other alternative is to remortgage/raise the funds at the end of the trust deed?

I'm probably better sitting down with someone to discuss this properly, I think I was just getting my hopes up that there was some way to avoid this equity issue by paying a fee upfront.

coolcait

Hiya WiP

There are a couple of threads about trust deeds on the IVA board - I'll see if I can find them for you. They'll give you a lot of info about pros and cons of trust deeds. (You'll find that a lot of the cons are put forward by someone calling themself 'coolcait':o ).

If there's any equity in your property, the trustee in a trust deed will want that amount of money paid into the 'pot'. If the property has no equity, or is in negative equity, then you could probably get away with paying a nominal fee (say £500) to buy out the trustee's interest.

There are some horror stories around about people thinking that their property wasn't included in their trust deed, and then being hit with a demand for payment at the end of the three years. So, if you do go for a trust deed, make sure that you agree what's happening with the property up front and get it in writing. Pardon the emphasis

If you decide to go for DAS, that will protect the equity in your property. It will also mean that none of your creditors can take any kind of legal action against you - they can't put an inhibition on your property, get a wages arrestment, or bankrupt you for example. It does mean that you're signing up to paying off all your debts - none of them will be written off (unless your money adviser can negotiate a deal, but that would usually happen further down the line).

The big questions are - how much do you owe, and how much are you proposing to pay per month? The answers to those questions will help you decide whether DAS or a trust deed is best for you.

HTH and good luck!

WorkInProgress

Hi Coolcait,

I think I'm leaning towards a DAS, I've read some of your other posts and you speak quite favourably about them.

How much I owe depends on how the unsecured part of my horrible NR Together mortgage is handled. Whether this is or isn't included will be a factor in whether I opt for a Trust Deed or a DAS.

My appointment is on the 8th next month but my head is a mess just now with loads of what ifs, I guess I just need to bide my time until then.

I do want to pay my debts off and the DAS would allow me to do this but I just worried about paying a significant amount to the DAS for what will seem like an enternity, but think I'll feel better for it in the end

coolcait

Hiya WiP

I can understand why your head's a mess just now - but hang on in there till the 8th. I think you'll find it makes all the difference having the chance to speak to someone face to face.

I have to admit that I'm a great supporter of DAS, and a fairly passionate opponent of Trust Deeds. But those are simply my personal views. I do realise that DAS isn't for everyone. I even recognise (and occasionally admit) that trust deeds obviously work for a lot of people - given the numbers that are signed each year. And we do tend to hear about the horror stories rather than the successes.

I suppose I'm waffling my way towards recommending that you keep an open mind about what's the best thing for you to do. I know I have my own views and prejudices on the options out there and - even though I try to stay neutral when posting (most of the time!) - those views and prejudices will inevitably come across. So please take that into account when weighing up what's right for you.

Good luck!

P.S. Forgot to add this link, but you might already have read the thread:

http://forums.moneysavingexpert.com/showthread.html?t=1271349&highlight=trust+deed

WorkInProgress

Hi Coolcait,

Thanks for the reply, I'll update once I've been to speak to the money advisor. Just wish the 8th would hurry up so I can finally make a decision and take my first steps to a solution.

WiP

WorkInProgress

Well I had my interview with the money advisor this morning and not really much further forward. She spoke about a "Pro Rata" which I think is just a DMP which they'll administer. From what I gather I won't have any protection and interest will only be frozen IF the creditors agree.
Dunno what to do now...

WorkInProgress

I did have an idea which I'm not sure is a good one or not. Having thought about a Trust Deed and the equity situation, I had thought of asking NR to make the unsecured loan (NR Together Mortgage) secured as this would remove the issue with the equity and make a Trust Deed a more appealing option.

Does anyone think this would be a stupid move? I'd still have a little equity left but not enough for them to take an interest in.

WorkInProgress

Anyone care to comment???