Hi Danielle and welcome.

The money will not be gathering much interest, and the interest will be used to pay a little more of what is owed to your creditors.

It's important to understand that there are two types of payments that will be due to be paid into a trust deed:

1 - Payments from income
2 - Lump sums from assets etc

A payment from one doesn't reduce the amount due from the other. This is what the creditors agreed to when they allowed your trust deed to become protected.

That's why the term of your trust deed doesn't reduce from a lump sum being paid in from the sale of your property. Your agreement with the creditors is to pay over such lump sums and also to pay what you can reasonably afford from your income for the term of the trust deed.

Your trust deed can end early if you pay off the total of:

1 - Your debts at the start
2 - Interest on those debts
3 - The fees of your trustee

The fees and interest could add a fairly significant sum on top of what was owed at the start however. You could ask your trustee if you're near clearing this full amount as yet (or whether you might be soon).

You mention you're on benefits. Is that your only source of income now? Are you still making monthly payments into the trust deed?

Thanks for the reply.

I work 16 hours per week, I have not made a payment to my trust deed for a while due to my circumstances changing last year with the separation and the house sale.

I today received a call from my trustee as they received my status report of my income and outgoings, and the have told me that i would still have to pay the same amount i was paying when i was with my husband. I have 2 young kids and receive no money from their dad therefore i am using every bit of my money on the kids, however when i was filling out my status report i was very cautious as to what i was putting down on it because i was worried that if i had no money left over i would then not be fit for a trust deed and i would need to go down the bankruptcy route which after the sale of the house would be for only a couple of £1000.

Thanks.

Hi Danielle

First of all, in relation to the funds from your house sale, it is likely that much of this will be distributed between your creditors quite soon rather than left to sit in a bank account for long.

Regarding your contribution level, you really need to speak to your trustee and make them aware that the status report you filled in was not an accurate reflection of your current costs if that is the case. There should hopefully be some room for flexibility and if more funds than originally anticipated have already gone in to the Trust Deed due to the house sale it may not be a problem for the Trust Deed being able to continue.

Thanks Kevin for your reply, the company who i have my trust deed with advised me that the money will sit in a pot until the end of the trust deed term, which for myself is another 38 months.
I would rather that the money went to my creditors just now rather than in 3 years time, is this something I can ask the trustee to do? As, my total debt was £13,999, i have paid 10 payments to my trust deed so far which is £1350 and with the £12.500 i received from my house sale this almost covers the total debt.

So rather than leave the money in a pot for my debt to gain even more interest and my trustee fees for another 3 years. I am wondering why all this money so far hasn't gone to paying off the debt which means i would only owe the interest and the fees which have gathered so far.

Thanks.

Hi Danielle.

I can see where you're coming from, but it just doesn't work that way I'm afraid to say.

The trustee has first call on the 'pot' for their fees and costs. These will probably amount to several thousand pounds by now.

Fees and costs? I thought there was just the trustee fee and the interest accrued by the creditors to pay?

Regardless of this even if the trustee was to take their fees first which isn't a problem as they would need paid anyway, surely the rest of the money from the house sale and from the money already paid should be near enough money to pay off the debt owed? For instance if their fees are £2500 that still leaves £10000 plus the £1350 already paid which should then go to the creditors reducing my balance allowing me to potentially pay off my trust deed sooner whether this would be monthly payments or arranging a lump sum to clear it.

I thought the job of the trustee was to help me pay back my creditors and once this was done take their fee for the service provided in doing so. After all the point of being in this situation was to get my debt cleared with my creditors.

Thanks

Hi Danielle,

I'm sorry, but I cannot really add much to the answer I provided to you before. We appreciate that you think it should work differently.

As Kevin mentioned I think it's very important that you contact your trustee to make sure you're not being asked to pay money into your trust deed that you don't have.

The regulations changed back in November 2013, so assuming your Trust Deed was signed after that date then the trustee has a duty to distribute funds to creditors at the end of year 2 and then every 6 months thereafter if there are sufficient funds to do so (ie if there is more than 5p in the £ available after costs/outlays have been met).