Welcome to the trust deed forum Trusted186.

I'm afraid that your trust deed is legally binding upon you, your creditors, and your trustee.

The law says that your trust deed must run for a minimum period of four years, unless you're able to repay (including what you have already repaid) a sum of money equal to all of the following:

1 - The full amount you owed at the start of the trust deed.

2 - Interest on those debts.

3 - Your trustee's fees and costs.

This is why the amount you're being told is necessary to settle is more than the debt that you owed when the trust deed began.

Is there a particular reason why you want the trust deed to come to an end?

Hello TDA, thanks for the reply, is it right that the settling amount is so much more?, you’d think my creditors would be happy with receiving the money earlier, they are telling me aswell that my first years payments went to fees instead of my creditors when I had no knowledge of that, are they allowed to do this?, and just want out of it, can’t obtain a mortgage and having it there when I’m able to settles annoying.
Regards

Hi Trusted186.

Several years ago it was possible for an agreed early settlement to be made with creditors to end a trust deed early. The Scottish government decided to change this so that there would be a minimum four year term by law (unless the amount explained in my previous post has been paid in). By contrast, it is still possible to agree an early settlement with the broadly similar IVA debt solution which is used elsewhere in the UK.

The fees in the early stages of a trust deed do consume a lot of the early payments because there is a set-up fee involved. To be fair, both you and your creditors agreed to this being charged (though I fully accept you might not have been aware of this at the time).

I don't think it's entirely unreasonable that interest would be added on for someone who has become able to afford to pay it. There was obviously an agreement to pay interest when the money was borrowed in the first place. The trustee is also obviously entitled to be paid for the work they've done as well, which can only happen at either the expense of their client or the creditors. The system as it stands states that this should be at the expense of the client (in the event that they have become able to afford to pay them).

How have you become able to afford a settlement?

That’s fair enough, is there any options for me or am I stuck with possibly paying the 15k?, the money is from a partner

Hi Trusted186,

I guess the options are quite simply:

1 - Carry on with your trust deed as it is.

2 - Your partner pays a sum of money large enough to enable your trustee to discharge you early (as described previously).

Sorry if this reply reads as being a bit "short" but this is the situation I'm afraid.

I appreciate the input, how quickly can that settlement figure go down in day a year from now, will it be much more of a difference?

Well...

The total amount owing could go down as you make your payments.

But at the same time there will be upward pressure (on the amount owing to settle early) as interest is added to the debts and your trustee continues to work on the case.

How much do you pay each month?

I pay £156 a month currently, looking at getting rid of my vehicle to free up another £320 to put that towards it also to get it paid up as soon as possible

Hi Trusted

The Trustee hands are ties so to speak. As TDA advised, the legislation doesn't permit early settlement unless the full debt is paid in full with interest as well as the Trustee fees and outlays.

P

Hello, so what would happen if I opt to put more towards my monthly payments so the debt in full would be paid before the end of the rest of my agreement?

Hi Trusted186,

You can complete your trust deed early (and be discharged early) if your monthly contributions and/or a lump sum add up to an amount that clears the debt, interest, and fees.

Would that be the same as the settlement amount or be less? Since it’s a larger monthly contribution rather than settling

It's all the same thing really Trusted186.

Whether it's monthly contributions and/or a lump sum your trust deed can come to an early end when the total you have paid covers all of the following:

1 - Debts at the start

2 - Interest on those debts

3 - Trustee fees

It's a bit of a moving target because, as time continues, the amount of interest will increase. So a big lump sum now might end up costing less overall than increased monthly contributions paid during the next year or two.

That’s a bit unfortunate to be honest, so what do you advise, continue with my contributions, or pay as much as possible and hopefully I can get rid of this early?