But that then raises the question of how the trust deed can be concluded without a sale of the property Mark?

There might not be any equity to split at that time if it has been sold, just the residue of the funds that went to cooler's wife from the sale when it occurred?

Hi TDA

I touched on that a couple of posts ago that the TD would not be concluded until the equity had been addressed. The existence of the debt or the date of separation would have no bearing on this in a live trust deed.

If the property was sold and the trustee received the half share and the wife received the other, then subject to the trust deed being finalised, any divorce action would need to seek recovery of part of the sum received by the wife in respect of previously existing debts and this being a valid argument or not would be decided by the Sheriff.

There is the argument that once the trust deed is finalised then the debt dies, but that does not seem to be the case as we know with RBS etc offsetting against both live and finalised Trust Deeds.

Mark

On that subject Mark this article has been added this week based upon something we learned: https://www.trust-deed.co.uk/rbs-and-ppi-claims-after-trust-deeds.html

Doesn't seem as though there is an argument about whether the debt has died or not, just what the relevant dates involved are. Effectively I think they're saying that the off-setting took place prior to the trust deed beginning, even though that process is only being formalised much later.

This may not be news to you but I thought it was really interesting.

I've read through this and don't understand where they are coming from to be honest.

I assume they are referring to the Unfair Preference section 36 in terms of the 'Reciprocal' arrangements ( Part 4). There would need to be an agreement in the original contract whereby the parties undertake reciprocal obligations. However, if this was contractual and the Trust deed was signed within 6 months of the debt being taken out then the argument would fall. You could not therefore use this as a general argument without qualifying the timescale.

I'm baffled by 'A person with a claim against an insolvent estate (a claim which arose prior to bankruptcy) can keep any money owed to the insolvent estate.' In what circumstances.

I could probably tie a big rope around my waist and dive into the argument, but I suspect the bottom line would be it's their interpretation against another interpretation and would take the courts to decide.

Mark

PS The big rope bit referred to the length not the bit going around my waist!

Hi TDE's just back from my visit with Divorce lawyer and her stance is following:

The debt accumulated from marriage date to separation date is 'matrimonial debt'
Irrespective of this debt being or portion of then being assigned to a debt mgt plan (TD), when it comes to calculating financial split, the separation date will be date used to calculate financial settlement.

My estranged assertion that she will be entitled to full 50% split with no debt taken into consideration is wrong and also it would not be a straight 50/50 split because I would have been contributing mortgage payments from the separation date to date of financial settlement whether that be house sale or an agreement between me and her.

This how you see it?

Hi cooler.

Your trustee will see this from a totally different perspective.

They're dealing with debts that are solely yours. That's why the trust deed is in your name and doesn't involve both of you.

As part of your agreement they'll look to collect your share of the equity to help repay your creditors. If that involves a sale of your home the other 50% of the proceeds would go to your wife as the joint owner.

What will happen after all of that, as part of any divorce proceedings, is out of our area of knowledge I'm afraid. I'm sure you'll rely on the advice you're getting from your legal adviser in that respect.

Hi cooler

I have a real concern when Solicitors or other professionals make such statements which are both incorrect and to be honest, dangerous. The Trust Deed is not a debt management plan. Insolvency/Trust Deed/Sequestration etc is looked on as the ultimate diligence.

As the Trust deed is in place, your one half share of equity will vest in the trust deed/trustee irrespective of separation or future divorce. The separation at whatever date will have no effect on the position and any potential clawback from the funds which would go to your wife would only be made on the basis of circumstances detailed in previous posts.

I'm sure it's not what you wanted to hear and would be happy to discuss matters on your behalf with the solicitor.

Mark

Hi cooler,

As others have said, your Trustee in your Trust Deed if the property is sold will take 50% of the net free proceeds as that is their entitlement under the Trust Deed.

Your ex-wife would then have claim over the remaining 50% and it would be up to you and the divorce solicitor to argue the point about this in terms of a divorce agreement.

One thing to be mindful of is that if you divorce during the period of the Trust Deed and your ex-wife agrees to split her share of the net free proceeds with you, say give you half then your Trustee under the Trust Deed could claim this.

In terms of your solicitor, you need to make sure that they have an understanding of Insolvency to ensure that they see both arguments, the divorce and the Trust Deed. Insolvency legislation is a bit of a niche sector and therefore you need to be careful of the advice a general solicitor will give on the matter.

Can you confirm what the original agreement was with your Trustee regarding the £100,000 of equity, your half share of that being £50,000?

Sorry to hop into this one so late - first chance I've had to look in on the forum today.

Just thought I'd confirm that my understanding is the same as the other experts. Creditors have to come first given that you are in an insolvency procedure, cooler, so the Trustee will keep 50% of the net free proceeds from any sale.

Having said that, if you were to subsequently divorce then a calculation is done of the value of the matrimonial property (ie matrimonial assets minus matrimonial debts - which may be debts that are just in your sole name) and either an agreement reached between you and your ex-wife, or a judgement made by the court. Your solicitor would certainly be a much better person to advise you on this side of things than anyone on here, but I think it is possible that you could potentially be entitled to something if it can be successfully argued in court.

As others have said, however, if you are still subject to your Trust Deed at that point then your Trustee will have a claim on these funds first.

TDEs

I appreciate all your input in this I I will ensure due diligence is applied between divorce lawyer and Trustee.
Today speaking to my trustee he advised that he would take a call from solicitor to ensure all bases are covered.

Suffice to say there is absolutely no chance of property sale going ahead during the term of the TD. Ihave to run with it and remain a prisoner to the property until mid 2016.

The issue I was raising has been wrapped up by kevin in a nutshell by the following:
'if you were to subsequently divorce then a calculation is done of the value of the matrimonial property (ie matrimonial assets minus matrimonial debts - which may be debts that are just in your sole name) and either an agreement reached between you and your ex-wife, or a judgement made by the court. '

According to my wife the matrimonial settlement would never apply as I had consumed all the debt and we are talking a sale of property well after the conclusion of TD.

Solicitor stated that the debt would still be viewed as matrimonial debt and therefore would be taken into consideration when negotiating financial split.

Thank you for you contributions, I intend following this up with updates to the thread as developments proceed as I am sure there are many husbands faced with the same uncertainty.

C.

Hi cooler

Can I ask how you will raise the £50k to allow the house to remain?

Mark

Mark?

Not sure if crossed purposes but am not raising any money to settle with estranged.

She can push to sell house expecting £50k, but there is no way the trustee will sanction sale of the house for as long as I can support the TD.

The initial figure in inception of TD was £80k equity £73k creditors.....the subsequent £100k estimate comes from subsequent mortgage payments and increase house prices last 24 months......

C.

But your trustee is going to require you to pay over your share of the equity cooler. Your trust deed cannot end until that's been done. The timing might be once your monthly contributions have been completed.

How will you raise this sum to end your trust deed without selling the house?

TDA....

Why?

The whole point of my TD is to settle with my creditors without selling my property....

C.

Because your assets vested in your trustee when you signed cooler.

If you had a lot of equity you'll need to pay that in addition to your monthly payments.

This will be one of the reasons that the amount of equity was specified in your trust deed paperwork.

I think you need to contact your trustee ASAP to establish what their expectation will be for dealing with the equity so that you can factor this into the wider situation.