Hi DFW,

Here's my understanding. Where there is no equity in a property at the start of a trust deed (or negative equity) it is possible for the Trustee to specifically exclude the property from the trust deed. As will all other aspects of a case, it's for the creditors to accept that this is OK (by the case becoming protected or not).

If this happens, and equity develops during the three years, it will not need to be released.

Most trust deed companies will charge ?ú500 for this (which is considered to be a perfectly respectable charge and process) and a couple of companies will handle this without charging the ?ú500 at all.

The key issue is to get, in advance of signing, written confirmation about how this will all work.

If you're unsure about your position I'd suggest that you get it confirmed in writing now.

Thank you TDA.

You've explained it as I understand it.

The interesting thing is that we discussed it all upfront and I was told that the company no longer charged the ?ú500 but that they'd be happy to exclude any equity that develops.

It's just that it doesn't say this in the TD paperwork which sparked my concern.

I'll get on to them and post back the outcome to help others.

Cheers and thank you again.

DebtFreeWannabee

Hi debtfreewannabee,

If it doesn't mention ?ú500 in the paperwork then I assume that this is just because it is not required.

Just to clarify, the ?ú500 payment that is sometimes requested by trustees is not a charge as such. It is a payment which should normally go into the pot to be shared amongst creditors, along with your regular contributions. I think it is a convention which has arisen so that creditors at least see some benefit for the existence of the property as an asset, albeit fully mortgaged. It reflects the fact that any valuation is merely an estimate of the value and although on paper there may be no equity, in practice this might not be the case.

Having said that, the company I work for no longer seek a ?ú500 payment. Although it is meant to be a nominal sum, in practical terms often it is impossible for people to arrange a third party to pay it anyway.

Hi Kevin

Thanks for responding.

I was more concerned about the fact that the paperwork doesn't address what happens to any equity at the end of the TD. It talks about there being no equity now but not what happens at the end. Maybe I should take that to mean that nothing happens at the end. Don't know.

I have sent an email to my trustee asking for clarification so we'll see what transpires.

Thanks again.

Cheers,

DebtFreeWannabee

Hi debtfreewanabe

the trust deed document is a specific document to cover all Trust Deeds and does not go into individual case details. Trust deed docs are very generally the same and very generic to try to provide a 'one fits all' agreement.

I know it's a rubbish analogy, but it's like the terms & conditions for a gym membership or similar, it gives the general rules and conditions, but does not mention your 80's leg warmers or when you should attend.

If you know what I mean.

Mark

Hang on let me check my TD...

It's true!

If I wear my leg warmers for 36 months, I'll be debt free.

Fame! I'm gonna live forever...