I think there is some misunderstanding here about the £500 and whilst the firm I work for do NOT look for this sum, I feel we should be fair to those that do.

I don't believe these firms are charging the £500 as a fee to themselves or to cover outlays, but rather are seeking it as an additional realisation for the benefit of creditors. Certainly this was the case for ourselves when we used to follow this convention. There is no need for it to be justified via time costs and outlays, it is justifiable merely as a sum that can be brought in for the benefit of creditors to compensate for the fact that the debtor owns their home and are being permitted to keep it. After all, trustees are meant to be acting on behalf of creditors to gather in as much as possible.

In truth, I don't believe there is anything intrinsically wrong about trustees seeking this kind of sum, and some might argue that they actually should be seeking it. Our firm stopped some time ago for purely practical reasons - in reality it is difficult for people to find a 3rd party to pay it and extending a trust deed is just creating extra work for very little extra benefit for creditors. So we took a decision it would be better all round not to do it.

If there is no equity there is no equity,creditors would not gain anything more if someone was a council tenant so to charge money just because someone lives in a home which the bank owns through a mortgage seems a bit of a money-for-nothing scenario.

Paul

The problem is that whether there is equity or not is very subjective and the only way of finding out for sure is to expose the property to sale on the open market. Also, equity may accrue during the term of the trust deed.

Also, it could be argued that by allowing someone to pay into a repayment mortgage then they are effectively buying an asset whilst in the trust deed, whereas this money could be going to their creditors instead - especially if the mortgage payment is higher than local rental rates.

Don't get me wrong, I'm not saying this is how it should be done. I'm just being devil's advocate here, to highlight that it isn't quite as straightforward as that, plasticdaft. It doesn't hurt to occasionally look at this from a creditor's point of view and realise that maybe what is being suggested is merely a reasonable compromise rather than an unnecessary cost.

Mark - the 2 x £500 is contained in the paperwork of the trust deed. It is not named as a "nominal fee" though. I will have a quick look through my paperwork and let you know exactly what they have called it.......

In the Estimated State of Affairs it is shown as Freehold Land and Property.

I do see where you are coming from Kevin. I know creditors sometimes ask IVA customers down south to switch to an interest only mortgage to boost the return to creditors,does this often happen up here?

Paul

Hi all

Sorry, I can't agree. This is simply a method of turning peoples biggest fear ( losing their home) and turning it into cash.

How about a deal in trust deeds where a family member pays £500 at the start in anticipation of any pay rises or overtime. That way if you double your wages, there's no change in contribution!

It is about balance. I have a trust deed and the guy stays in the West End of Glasgow, his rent is pretty big. Following this logic, I will now demand he buys a house as a mortgage would be cheaper. Or perhaps charge him £500 in the event that he decides to buy a house in the future!

The actions of a Trustee under a Trust Deed require to be based on something and definitely not 'The other guys do it like that' book of insolvency.

At the stage people speak to guys like us they are at their most vulnerable and should be afforded an element of protection, not asked to sign a standard document which has been amended ( & normally posted) to suit a purpose. It would be an interesting exercise to compare fees & agents fee variations between the £500 club and the non £500 club.

Fred's statement of affairs ( as at the date of appointment) appears to show a positive value in something which has a negative value. Amazing.

Mark

Interesting that such a point which really should be standardised across the industry can have such conflicting views.

Not the only time in insolvency where I have witnessed 2 very differing views on a rather important factor!!

Its no wonder Joe Bloggs can end up in bother for not understanding the small print in a PTD!!!

Paul

Paul

This is my ongoing dilemma. I have been told that this is payable twice because the formss have to be done individually for myself and my husband for each property we own. I think I have worried too long over it. Regardless of the approach of any IP we eventually go with, the lack of equity is pretty certain as is our ability to £1000+ for any property to hedge against possible equity gain whether funded through a 3rd party or not.
We probably need to take the chance then that there will be little equity accrual and if it does occur, the property can then be sold to pay amounts required by the trustee.
I found the comments by Kevin interesting-it probably wasn't meant to be but it seemed a little like a penalty for property ownership. The right to keep a liability on the basis that losses may reduce over time-how long who knows. All my mortgages are on an interest only basis so payments are not purchasing the asset.

My impression is that it has largely gone unchallenged by people who are unsupported, vulnerable and uninformed. People have been forced to take on family debts to explain the need and ask for help in making payments.

I agree with you Mark, I'm just saying that I can see the merits of the argument from both sides. You were representing the £500 as a fee charged by the trustee to keep for themselves whereas in reality there is no reason at all to suppose this is the case so we shouldn't really be so ready to criticise without knowing the facts. To conflate this with postal TDs and agents fees etc is also a bit of a leap. I am just trying to be fair and present a more balanced viewpoint.

Hi Kevin

In my Very Limited experience of associates entering bankruptcy they've been told the fees for the IP are approximately £800 per person plus £500 = valuation costs per person per property. In any discussion with introducer/packager/client this seems to be assumed as payable.

I can see that £500 would easily be swallowed up by marketing and legal fees associated with any sale so it is a lower cost option to have the amount payable at some stage. If IP's are flexible on the timing, that helps.

Hi Pamjo

What forms?

Mark

Good question-I presume others like me wouldn't ask either. Forms re. dealing with the IP's interest in the property.

Hi Pamjo

I would certainly ask the question if I were you.

The answer may be quite interesting.

Mark