Hi Caroline

No, if a trustee insists on this it must come from a third party, although the payment method is at the Trustees discretion.

Mark

Hi Mark

If, as seems likely, I cannot use a trust deed due to lack of surplus income and the fees for bankruptcy are similar, ie unaffordable, what would happen in regard to the fees for any IP appointed by the AIB if a creditor applied for bankruptcy.

I don't want to take up too much time on a trust deed forum after I know this not to be an option as I have specific complications regardless of which route I opt for.

One question which will determine my exposure to a lender seeking bankruptcy(as I understand it) is the shortfall on a repossessed property. Does the lender need to have completed a sale and shown an actual, quantified loss to then pursue on that basis? There are no arrears on the property mortgage.

HI Mark
Sorry, [:o)] I should have began my earlier post with asking for clarication-Is it the case that not all trustees charge this £500 or £1000 per couple for the interest in a -ve equity property?[?]

Hi Pamjo,

It's getting a little complicated discussing similar issues on multiple threads in the forum. I'll try to run through your questions here and perhaps we could try to keep the issues together.

Not every Trustee charges this £500 fee in a trust deed. Some don't charge it at all, some seem to charge it per person, some seem to charge it per property. There doesn't seem to be a single method by which it is handled.

There is a descrepancy in the information that Shona previously provided (that the £500 fee would generally be requested in bankruptcy) and that we in the advice team have heard that it in fact depends on which Trustee you end up with in bankruptcy whether and how this charge is applied. It would be great if one of the experts could add their thoughts on this for us.

You don't have to pay the £500 fee (if it exists). If you do not, and equity develops (rising property prices and/or repayment mortgage) you'll need to find the funds and pay it over. If the funds cannot be raised by other means the property or properties may need to be sold.

Do you have a shortfall on a property or are you expecting one? Could you give us some details if that's the case?

On another thread you asked about whether a property would only be sold in a trust deed or bankruptcy if it would fully repay the creditors. That isn't the case.
If you have an asset that could be disposed of in a way that money would be released (and could be paid into the trust deed or the bankruptcy) then the Trustee has a duty to realise those funds. It doesn't mean that the asset has to be sold, a third party could pay over the value for example instead. Where people starting a trust deed have a little equity in their homes they sometimes make extra monthly payments after the usual three year period to cover the equity.

If you enter a trust deed or become bankrupt each of your properties will be valued. If any have equity that will need to be contributed on a property by property basis.

Hi Caroline.

We've heard from people who have been asked to pay that £500 in all sorts of different ways. Some pay a little extra each month over the term, others are asked to pay it pretty near the start of the trust deed, others are told it must be paid during the first year.

As Mark says it will come down to the policy of any particular Trustee with whom you're dealing.

Hi TDA

Yes, I appreciate I asked several similar questions on separate threads. I also said on another thread I am keen not to take up too much of member's time on bankruptcy when the forum relates to trust deeds. It is very helpful to get experts' views and comment on general terms and procedure and I greatly appreciate your input and the others'

Hi Pamjo.

There is a particular focus on trust deeds in this forum, but the site exists to help with queries about debt in general as well.

Please feel free to ask bankruptcy questions here.

I have a mortgage denominated in yen, long story short, a £63k loan is now at £120k+ as a result of currency shifting adversely.The lender is pursuing repossession on the basis of negative equity, not arrears. I am certain that equity in other properties and our home will not meet this shortfall. If the lender repossesses, we will then need to wait for them to sell and quantify the actual shortfall-I think. I was also advised elsewhere to voluntarily hand it back prior to bankruptcy and in this regard I was looking for information re. costs to actually apply for bankruptcy including buying IP interest and paying their fees([?]x2). There is also the question of the lender possibly applying to achieve our bankruptcy and I am unsure re. timescale, costs and implications there.

Hi Again TDA

I have been advised that any individual property with equity cannot have the IP interest bought as it has to be sold even if it only covers the IP fee for administering the bankruptcy. Is this your understanding? Then the monthly payments from disposable income would all be available to pay creditors.

Hi Pamjo.

I've not heard of a lender taking possession of a property purely because it is in negative equity before. It seems counterintuitive as they'll be crystallizing a loss (or at least the risk of a loss).

If repossession procedures had begun, and you were aware that a shortfall was likely to be created in the future, you would notify your Trustee at the start of any trust deed or bankruptcy proceedings. The loss would become an unsecured creditor like any others and it would be up to the mortgage lender to determine how much the shortfall is and make their claim to the Trustee based upon this.

At the point that you sign a trust deed, choose to become bankrupt, or are made bankrupt, a Trustee will become responsible for collecting what they can to help repay your creditors.

Such collections will be based on your reasonable surplus income plus any significant assets that you own.

The Trustee will look to each of your properties to see if there is equity in them. If there is (in any individual property) this will need to be paid over one way or another. A third party could contribute the funds or the property could be sold. It will only be sold if it's in the interests of the creditors to do so.

If you want to start a trust deed you'll need to be able to demonstrate to the Trustee that through a combination of surplus income and assets you will be able to pay over an amount that will cover their fees, costs, and a reasonable dividend to creditors.

If you want to become bankrupt and choose a Trustee for yourself you'll need to demonstrate to them that through a combination of surplus income and assets you can contribute enough to cover their fees and costs.

If you want to become bankrupt through a direct application to the AIB you do not need to worry about demonstrating any capacity to pay in order to "qualify" in any way. Your case is likely to be outsourced to an insolvency practitioner who will make investigations into your capacity to pay via surplus income and/or the value of your assets. The IP will be paid either by the AIB, by any contributions it is assessed that you should make, or a combination of both perhaps.

If you are made bankrupt by a creditor the same scenario applies as above (where you become bankrupt by going direct to the AIB). You'll only pay if it's assessed that you can.

In respect of all of these options, any Trustee will value all of the properties to see if there is equity that can be paid over to help cover their fees and repay some money to creditors.
Some Trustees may look to charge a sum to discharge their interest in any property that has no equity or negative equity. The exact manner in which they do this varies from firm to firm.
You do not have to pay this sum. In fact you're not meant to pay this sum at all. It needs to come from a third party if it is paid at all.
If it isn't paid, and equity develops in the property prior to your discharge from a trust deed or bankruptcy, you'll need to organise for it to be paid over or risk the property being sold to release the equity.

Thanks for taking time to put together that response, it does help clarify.

I appreciate it seems odd and it has certainly not been accepted lightly but we have had a calling up notice which will be expiring on 2nd October.
I am unfamiliar with the timescales/process from there. As you correctly point out (and I have repeatedly highlighted with the lender), repossession and selling now will create an actual vs a theoretical loss. This seems to be met with repeats along the lines of 'It's the security stupid! They are happy not to repossess if we just pay £54k to redress the LTV breach, sadly not an option we have.

Do you have other unsecured debts Pamjo?

I am struggling to see how they can repossess your property if you are not in arrears on your mortgage, pamjo. I am not a lawyer but I'd have thought default on your repayments would be necessary before they can call up their security - perhaps you should be seeking independent legal advice on this? I appreciate you may not have the funds to take on a lwayer, but there are law centres and solicitors providing surgeries in CABx etc that may be able to help you out for free, or charities such as Shelter.

You can only receive a calling up notice after going into arrears. Absolutely 100%.