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Topic starter
24/03/2019 10:51 am
I have a possibility of receiving a lump sum of money, no idea yet of the amount. I am just entering 4th year of a trust deed, then next year have the final year that was added on to protect the equity in our house. My question is how does it work if I do not receive enough to clear the full original amount (but if I came close to it even?)? And how would the payments made so far contribute to the original debt (not sure how much of these is taken up in fees or interest etc)
And are there large fees added on if you do this - have just read a post on here where someone says they had £10k fees added on when looking at paying off early. I know I’d need to approach them directly to get specific advice but just looking to get any kind of general idea first while I wait to see if I am receiving anything and how much it would be
Thanks
25/03/2019 8:42 am
George
The trust deed can be closed off earlier than the 4th year if you are I n a position to settle all debt with statutory interest (charged 8% per annum) together with the trustee fees and outlays. The fees and outlays will be detailed in the original proposal to creditors.
In order to advise further, can you advise the source of the funds? If it is derived from funds other than a third party, these may automatically be conveyed to the trustee as part of the process.
I would contact your trustee and ask for a full cost recovery breakdown.
Sharon is no longer posting in the forum.
25/03/2019 3:39 pm
Hi George and welcome to the forum.
Normally fees in a Trust Deed are based upon a set fee and then a % of how much the Trustee ingathers into the Trust Deed. The fees are mostly capped by the creditors to £2,500 and 20% of realisations.
As Sharon has said on top of the Trustees fees statutory interest can be applied which will take up the total.
In your Trust Deed proposal that you should have received at the start of your Trust Deed it should have this confirmed in it. Have a wee look.
If you have choice over receiving the lump sum or not then if you choose to accept this it would be ingathered into the Trust Deed. An example of this could be a parent or family member wanting to give you money now rather than in the future. You could defer accepting the lump sum until after your Trust Deed was completed and therefore you would benefit from it.
If you don’t have a choice i.e. it’s inheritance for someone that has already passed away then unfortunately you could be looking at a large amount or all of it being taken into the Trust Deed.
An alternative if you have a choice over the lump sum is the final year of the Trust Deed for the equity, you could ask your Trustee if you can use the lump sum to pay this off and finish your Trust Deed at the 4 year point. This could work if it was a family member giving you the money. They could pay off the final 12 months.
Best thing to do is reach out to your Trustee to ask for a breakdown. If it were me and I could avoid the lump sum and postpone it until after the Trust Deed I’d consider doing that.
Let us know how you get on.
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