Welcome to the forum mac70.

It really depends upon what was agreed at the start and the attitude that your trust deed firm now takes. I think you'll need to raise the issue with them directly to be sure where you stand.

If this sum were fixed at the start, and you agreed to it on this basis, they'd be within their rights to expect that the creditors receive what they originally agreed to.

However, there's only so much that can be done about this if there is no way to raise the £8000 (because they will not force a sale of the home if there is negative equity). They may expect extra monthly contributions to pay over this sum, or they may review the position in light of the fact that equity no longer exists.

If your home were to be revalued at the end of the trust deed there should be no issue for you if negative equity is the current status.

Thank you for this.
I have spoken to my TD Company and they have advised me that it is 'tough' and I would be expected to raise this money somehow to pay the creditors. They also informed me that if I was unable to do this, I would be made bankrupt anyway.
I raised this question because when I bought my house, my earnings were far greater than they are now so I would not even be able to remortgage based on my income and this was the answer that I was given.
Also, if your earnings go down, can your TD be re-evaluated without being extended.... what I pay monthly, I am left with a minus and it is becoming a problem!
Finally, when I took my Trust Deed out, my Tax Credits were included in my income even though my Tax Credits was to cover nursery fees and these have also been significantly reduced yet they are still included. Is this correct!
Sorry for so many questions and thank you for you assistance

Oh one last thing, so sorry! When I spoke to my TD last week, I asked if i could bring my TD up to date with payments if a family member supported me in this as my Trust was due to finish April 2011 and I was advised that yes, that would be possible however I would still need to find the other £8K from my property, again I advised it is in negative equity but still I was told it's tough and I would have to find the money some how.
Some clarity would be much appreciated

Hi again mac70.

It's going to be tough to give you clarity from this forum; the situation comes down to what you agreed to from the start (which will vary from client to client, and also from firm to firm).

In general we believe that it's fairer for everyone if the equity figure is agreed at the start of the trust deed so that client, Trustee and creditors all know what to expect and can plan accordingly.

We used to read some terrible stories here in the past where people signed trust deeds then their homes grew in value significantly (when revalued at the end of a trust deed) leaving them needing to raise tens of thousands of pounds. Agreeing a figure at the start avoids this potential issue.

We also think that if you have equity in a property at the start of a trust deed you need to have a plan as to how that money will be raised right at the start of the trust deed. The days of remortgaging a home to raise cash while in a trust deed are (for almost everyone) long gone and showing no signs of a return. In this respect the house decreasing in value isn't necessarily relevant as it almost certainly could not have been used as security to raise a refinanced lump sum anyway.

If your pay goes down, through no fault of your own, your trust deed payment should be reduced. We hear from our experts that a client should not be penalised for this, though we read here in the forum that in practice not all firms deal with this in the same way.

Your tax credits (as they really are) should be listed alongside all of your other income sources. From this should be deducted your expenditure as it really is (including any changes in nursery fees if that had happened). This equation should determine what you are paying.

Any trust deed firm should know that you cannot pay over money into a trust deed that you do not have; this is the same methodology they use at the start of the process to confirm that you cannot afford the contractual repayments on your debts and to assess what you can afford to pay into a trust deed or other possible options.

Thank you very much.
The agreed amount was £8K from the beginning of the trust deed. I am just not sure where I am going to find this at the end of the deed.
My circumstances have changed dramatically over the past 2 years and my salary decreased, it was my understanding from my TD Company that they could reduce my payments however, they would extend the term, is that also correct...
Once again thank you for your consideration and detailed response.
Can I just say this forum is excellent. I have been sitting for nights/days/months with no where to turn for advice. Thank you.

That's kind of you mac70.

Some firms will consider reducing the monthly payment and extending the term of the trust deed. This may represent an outcome that suits you and your creditors given the circumstances.

Depending upon what you can pay each month £8000 might take a very long time to pay over. You may wish to weigh up whether bankruptcy is now a better way for you to proceed if you cannot pay much each month and you are struggling to raise the £8000. In bankruptcy an assessment of what you can now pay will be made (if there's anything it will be paid for three years) and your property is unlikely to be at any risk if it's in negative equity. However, you'll need help from your Trustee for this to all happen.

Some posters here have reported that they have been able to negotiate settlements in lieu of equity with their firms. For example, if a family member could come up with £4000 in lieu of the equity it might be argued that it is in the interests of your creditors to receive this sum and end the trust deed rather than to wait years while monthly contributions are made (and the trust deed firm are charging for their extra work). If this were a possibility there would be no harm in trying to negotiate something.

Excellent advice. Thank you once again.

Hi TDA

I have pulled out the papers for my Trust and braved the reading with regards to the equity in my property and this is what it says:

Signed and dated:17/04/2008

The available equity will be realised by way of re-mortgage. Should the Trustee be unable to realise the full amoount of the equity the Trustee will revert back to creditors. The debtor has also been advised that if the Trustee is unable to release the equity in the property by any other means then it can be marketed for sale.

I then received a letter date 29/10/10 this is what it saids:-

You will recall that one of the terms of your trust deed was the realisation of the available equity in your property. At the time of signing the trust deed you agreed that you would endeavour to re-mortgage your property at the end of the trust deed to raise the required funds. (I did not say I would re-mortgage, I was told they would sort this out for me through their contacts)
I felt I should write to obtain your confirmation thaat you still intend to re-mortgage to allow the equity to be released. I would be obliged if you would provide your proposals by 14/11/10

My first question is:-

Because all correspondence refers to the equity in the property, surely if there is no equity then they cannot force payment of something that does not exist

and my second question is:-

Why would they write to me over 2 years later to get confirmation from me that I intend to re-mortgage to allow the equity to be released!

I know I am going off on a tangent here, I am just trying to understand everything and way up my options. My preference is to follow through with the TD however, if I lose everything anyway because I can't make the equity payment then I need to reevaluate everything.

Thanking you in advance

Hello again mac70.

This line is interesting:

"Should the Trustee be unable to realise the full amount of the equity the Trustee will revert back to creditors".

If you did agree to raise £8000 in lieu of equity as part of your trust deed this seems to open the possibility of some negotiation (like I mentioned before)? If you can come up with something to offer you're in a pretty good position considering that there is no point in taking your home from you and selling it.

If you didn't agree to raise this fixed amount of £8000 then the position is different.

It's hard to comment on whether or not you agreed to pay this fixed amount having not read all of the documents and not having been a party to the conversations.

When you look at the paperwork that you have is the £8000 sum listed amongst the sources of funds that the Trustee has based the offers to your creditors on?

Hello again TDA.

I have signed and agreed to the statement above with regards to 8935.66 of equity in my property which is always referred to as equity and has never been referred to as 'in final settlement'.

What would you deem to be reasonable negotiation?

My future plan is to get a family member to clear the outstanding payments, bring the plan up to date however, I do not want to enter into negotiations with my Trustee until I am very sure on what is achievable.

I do believe that an error has been made somewhere along the lines as I find it strange to be asked to confirm repayment when it is written into my trust!

Hi mac70.

I suspect that this was a standard letter designed to open a dialogue about how you intend to raise the sum mentioned.

It will be interesting to hear the thoughts of Mark, Kevin or Shona on all of this when they next visit the forum.

Documents I have signed are Trustees Estimated Statement of Affairs

Proposed Scheme of Division for the trust deed

And

Monthly income and expenditure

I can advise that not one of these documents are on headed paper and do not hold company stamps or headed paper. They are clear white A4 printouts.

I am now wondering (and I have only just realised) if this is what I am not being told!

How silly am I! My 12 year old could of printed these off and signed them!

I would like to hear from Mark, Kevin or Shona with regards to this.

Is it possible to get an independant body to look over my papers and if so, could you recommend anyone?

Sorry, thank you very much and of course, I would like to hear from you also. You have been very helpful and whilst this may not go anywhere, it is good for me to understand things better

I'm not sure that you've been silly at all mac70. You're just trying to clarify where you stand and what your options are.

I know that a couple of the experts had extremely busy days yesterday (and another is on study leave right now) but hopefully one will be able to add their thoughts for you pretty soon.