Hi Golfer66.

I'm not sure that there's any right or wrong here from what you've written. It's just a matter of what you can get agreed with your trustee.

It would appear to be better for your creditors if a lump sum of £3840 is paid now compared to 24 monthly payments which add up to £3840. That's because your trust deed will be shorter, the fees are likely to be less, so the creditors get more.

So (in the simplest of terms!) a settlement of £3840 now will be financially disadvantageous for your trustee (lower fees), the same for you (in terms of the total money paid - but you'll be done much sooner), and good for your creditors (who will get more sooner).

And I suppose if there is a total of £3840 equity in your home that vested in your trustee they may feel obligated to collect this sum in total.

Thanks for the reply my only worry is that they are saying I have £13000 equity in my home and that after paying either the lump sum or the total over 24 months they will want more of me .

Ahh... that's a very different issue in that case.

Have you discussed what will happen at the end of the 24 months in any detail?

I have asked to get it in writing that it would end after extending it for the 24 months

Did they agree to that Golfer66?

Hi Golfer66,

Did your Trustee obtained a valuation and redemption figure for your property at the outset of the Trust Deed? I'm just trying to understand at which point the equity has been calculated. If it was established at the outset and then proposed to your creditors then your Trustee will need to try and achieve what was proposed to them as that is what they will expect.

If your disagree with their valuation your can obtain your own one and then try to negotiate with them over the equity. You would unfortunately be responsible for this cost. You could initially speak with a local estate agent to gauge what they think the minimum your property would value at as this should be free. If it's a low figure you could then speak with a surveyor to organise a property valuation.

The most important thing when dealing with an issue regarding your house and the equity is to get everything in writing. Don't go on what you speak with them over the phone, make sure anything like that is then followed up and confirmed in writing.

David when we started the TD we had a secured loan on the property which would end roughly the same time as the proposed TD and as our mortgage is a repayment our redemption figure was always going to be lower than our actual value of the house . We did ask the advisor that came to our house about all this and he said we didn't need to tell the creditors that the secured loan was finished and we would still probably be in negative equity . I have contacted a local estate agent and the value put on our house is roughly what the TD company are saying its worth . My only fear is as we are in a repayment mortgage our redemption figure will be lower still in 2 years time and the will extend it even longer .

They said they would try and get it in writing if the creditors agreed to just the 2 years .

Hi Golfer66,

I'm really disappointed to read what you have just said about what an advisor told you when you were in financial difficulty and needed sound advice and guidance. Was it an advisor from the actual company you signed a Trust Deed with or was it a third party introducer?

What was the actual agreement you made with your Trustee regarding your property and how that would be treated in the Trust Deed? Was it just the case that it would be reviewed at the end of your 3 years?

You want to get the Trustee to agree with you an amount which should be fixed at a point in time i.e. Today. You can then work towards this figure with the knowledge that it won't change. I can understand your concern however about extending it for 2 years and then being asked to pay more. How much are you paying per month to your Trust Deed?

The new changes to Trust Deeds due into force this Thursday ensures the the equity in a property must be established at the outset. I know this is no consolation to you but to others that are considering a Trust Deed it might give some reassurance.

Sorry for the delay in my reply David just been rather busy. We were told by a 3rd party and then our trust deed company actually told us the same over the phone . And that was the main reason we went for it as we were on a debt management plan for just over a year and this sounded like the ideal opportunity to get debt free. We were actually told by the TD company not to worry as there was likely there wouldn't be much equity because the way the market was . I pay £160 and my wife pays £150 .

Hi Golfer66.

I'm sorry that you're in this position. Unfortunately it sounds as though you were dealing with salespeople when the trust deed was being set-up rather than any real kind of adviser.

You may wish to point all of this out to your trustee as you try to clarify with them what's going to happen after the two years have come to an end. This may help to apply pressure for a solution to be found.

To others reading the best ways to protect against this are:

1 - Ask any adviser you speak with what professional debt advice or insolvency qualifications they have. Would you take medical advice from someone with no qualifications? If they haven't got any qualifications don't deal with them as you'll have little or no assurance that they know what they're talking about.

2 - Get all important issues confirmed in writing by the trustee firm before you sign the trust deed. A salesman who's "spinning you a line" isn't likely to put their false claims in writing and, if they do, you'll have something very powerful to fall back on if it's on company letterhead.

Hi Golfer66,

The first thing you want to do is request in writing from your Trustee how much equity there is in the property so you then have an idea what you need to pay over. If you do have £13,000 of equity then you could consider extending your payments at the end of the 36 months. You could potentially extend them by a further 24 months and if you are paying £310 per month then you could realistically pay over £7,440 towards this amount. Maybe there is a little room to negotiate with your Trustee.

As I said you really need to discuss this with your Trustee and then we can advise you a little further. The most important part is to receive things in writing when you speak with your Trustee.

I'm disappointed to read what you have said about the advice you were given at the start. If set up for the right reasons and not just to achieve a ÔÇ£saleÔÇØ then a Trust Deed can and does work.

If however people are ÔÇ£soldÔÇØ a Trust Deed it's only going to leads to problems later on down the line. When it comes down to it a Trust Deed and Sequestration is a very powerful tool and every advisor who deals with the initial enquiry from a client is effectively playing with that person's life especially when a house is involved. That's how I always look at it, a client is placing a very important part of their life in your hands to help them with. I think the problem is that when a client finds an organisation to help them they automatically assume they are qualified and know exactly what they are talking about so straight away will trust them. I know when I walk through the door of my doctor I assume that the person behind the desk is a qualified doctor. It's a good suggestion TDA to ask about qualifications and even the level of experience that the advisor has.