Trust Deed Questions

toomuchdebt2009

I've been advised by the local council money advisor to apply for a trust deed for me and my wife but I have a few questions...

The moneyadvisor said I can arrange keep my car - i get a car allowance from work for it. I've just read the finance agreement which says they can terminate the hire if i become bankkrupt or call a meeting with creditors or enter into an agreement to settle debts. Would this apply if the car and finance agreement weren't one of the creditors included in the trust deed?

He also said I can keep my house because I'm in negative equity and it's worth nothing.

I think the trust deed would show on my credit file for 6 years - after that is there any reason I wouldn't be able to apply for a normal mortgage. Would the settled trust deed cause me any problems?

We have no assets but can afford to pay £500-£600 per month between us.

EvanA

Hi TMD09,

I myself am in the process of setting up a Trust Deed and I will attempt to answer some of your questions.

Within a Trust Deed you have to list all your creditors - overdraft, credit cards, loans etc. You cannot choose to omit any of them.

With regards to your car, so long as your car is on a Higher Purchase agreement you will be fine as it will state in the Trust Deed that you require the car in order to maintain the payments you have agreed to. If you have bought the car under a standard loan agreement through either a bank or a car finance company like Arnold Clark - then you will have to list them as one of your creditors and that might result in them just taking back the the car and terminating your agreement.

In a Trust Deed all your assets are transfered to your Trustee (the person who will administer your Deed). It is worth bearing in mind that it is the Trustees job to ensure the creditors get the best deal in 'their' interests - not 'yours'. So although your house may be in negative equity just now, if after the three years its then in positive equity - any equity will be released and split between your creditors on a pro rata basis.

It is only after the three years that all your assets are transfered back to yourself.

After three years and completing your Deed, you will find it difficult to gain a mortgage, but in the three years after this you can start to rebuild your credit rating and after six years you will be able to apply for a standard mortgage because it will no longer be on your credit history.

Antoine_Roquentin

You're wrong about the car. If it's a fixed sum loan and not hire purchase the finance company don't have the right to take the car back as it doesn't belong to them it belongs to you. You would have to list them as a creditor but it would be up to the Trustee if you keep the car depending on it's value. A third party could make payments towards it's value if it is too high to justify letting you keep for travel too work.

If the car is on HP you can keep paying it provided it's a justifiable amount each month - in this case it's being paid by the guys work.

As for negative equity you could discharge the future interest in your equity from the Trustee for a nominal fee.

toomuchdebt2009

Signed my trust deed recently with the wife who signed one too. We both have to pay £500 each (before the 3 years is up) via a third party to exclude the house which is in negative equity. The Mrs has to pay £500 to exclude the car.

I've just realised that my new bank account is with part of HSBC group and one of our credit card debts is with john lewis financial services who are also part of HSBC group. Can they set-off using a credit balance from the new current account to pay the other debt or is john lewis financial services seperate enough from HSBC for us to be OK and not worry about set-off?

Antoine_Roquentin

I'd get another bank account. They can't take money out of it if they have agreed to take a dividend from the Trust Deed but they are likely to close it if they cotton on.

Choo_Choo_4

Yea TMD2009 - you need to get a new bank account. Yes they may have agreed to the Trust Deed but it usually takes a while before this filters through to all departments so you could find that they might take money from your account which will be refunded BUT we know how slow the banks can be when it comes to giving money back

Good luck with your Trust Deed and yes the £500 payments covers the Interest in your property and they cannot come back at the end of 3 years and demand more whether there is equity or not.

zebade

I was advised by my Trustee to open a basic account with a bank that ive not got any debt through, and open it prior to starting the trust deed.

I tried Nationwide initially who knocked me back, but got an account with the Clydesdale no problem. Its important to get a Basic account ie no overdraft, cheque book etc.