Welcome to the forum ryn85.

I think it's very unlikely that the car will be taken from you.

There may be other consequences though - what do you think the car's value is?

Hi TDA,

Thanks for the prompt reply. I estimate the car's value to be just under £7000 due to low mileage and good condition.

I think it would be dangerous to go ahead and make this arrangement without running it past your trustee first, as there is a real risk that they would see the car as an asset once the finance is fully paid off. However, if it can be shown that your creditors will be better off then there is every chance that they will feel able to allow it to happen.

Hi Kevin,

Thanks for the reply.

The car wasn't listed as an asset in 2013 when the PTD was set up, which isn't surprising as it was still owned by the funding company,but is it the case that if the balloon payment is paid and ownership is transferred to me that the creditors can claim on an asset that wasn't included in the PTD?

If it is considered an asset and subsequently taken away, is there a way I can show that it would negatively effect my ability to carry on with the PTD?

Thanks.

Hi ryn85.

It's not that it would necessarily be taken away, but a car worth more than £3,000 that you acquire would still likely be an asset that your trustee felt obligated to address in some way to help repay more to your creditors.

For example, this might involve an extension of your trust deed to enable extra payments to be made to deal with this equity.

As Kevin has said, speak to your trustee about your plans. It's their answer to this question that's important to you rather than ours.

The crux of the issue is that if it is considered an asset they would no doubt expect me to pay more, but if my relative does take out this loan and pays the balloon payment, the monthly payments I am currently making to the funding company would essentially just transfer to my relative so as to pay off the loan. Therefore, my monthly expenditure would be approximately the same and I wouldn't be making any kind of gain out it.

What also made me wonder was a paragraph in the documents of my PTD agreement which states:

"...at the date I sign this Trust Deed, my whole estate (apart from such of my estate which would not, under Section 33(1) of the Bankruptcy (Scotland) Act 1985 or any other provision of the Act or other enactment, vest in a trustee of a sequestrated estate) which is now owned by me or which shall be owned by me during the period of one year starting on the date I execute this Trust Deed (hereafter referred to as my "estate") for the purposes and on the terms set out in the Regulations."

Can you clarify what the "...which shall be owned by me during the period of one year starting on the date I execute this Trust Deed..." part is about?

I thought it may mean any asset acquired after that one year would not be included in the PTD.

Thanks.

These aren't standard documents ryn85, so I wouldn't be able to comment on that clause in isolation of the rest of the agreement.

However it's pretty standard for the agreement, one way or another, to cover all assets that might come your way prior to your discharge.

In terms of your comment about monthly expenditure, that's clearly true. But you would probably have acquired an asset that your trustee feels obligated to address. That's why I mentioned an extension being one possible scenario, rather than a payment increase from day 1.

Assets and monthly payments from income are two different things.

Hi ryn85,

As others have said, it could be viewed that you are acquiring a vehicle worth £7,000 with no outstanding finance and as a result it could be seen as an asset.

If this were to be the case the Trustee could review the value of the vehicle at the end of your Trust Deed payments and decide that if at that point it's worth more than £3,000 they could ask you to extend your payments and pay over the value. Any vehicle worth less than £3,000 is not regarded as an asset.

If you reasonably require the vehicle for work purposes I don't think there will be any issues with you continuing to pay the monthly payment to the finance company or your family member.

It's best to speak with your Trustee about this and ask them to confirm in writing what would happen if you decided to proceed with your family payment paying the balloon payment.

Let us know how you get on.

If the Trust Deed says 1 year then I think you might have a case to argue that the Trustee has no rights over the vehicle if it is paid off in full.

However, I would hope that it shouldn't come down to this and that your Trustee will be happy for your plan to go ahead without regarding the car as an asset anyway.

Wow, thanks very much for the all the advice folks it is much appreciated.

I'll speak to my trustee over the next few days and see what the outcome is. What are the chances that my trustee will push for the car to be sold on to satisfy creditors? That's the worst case scenario, and why I've been reluctant to raise the issue so far.

Also interested r.e. your last post Kevin. Are you aware of any other PTD's where any assets acquired post agreement date are not included?

Thanks.

As mentioned a couple of times here ryn85, I don't think the immediate sale of the vehicle is a likely outcome at all.

It's obviously on your mind as a real concern, so I'd suggest you speak to your trustee about this as soon as possible so that you know where you will stand if this proceeds as you expect it to.

Hi ryn85,

I don't think your Trustee will push for it to be sold.

I think all Trustees would rather allow a client to retain a vehicle, continue with their monthly payments and if the vehicle is treated as an asset then extend the clients payments to pay over the value of the vehicle.

A quick call to your Trustee and I'm sure very quickly they will be able to confirm their position and how they would view their vehicle.

Hi ryn85

In normal PCP deals there is no requirement to make the final balloon payment as the agreements allow you to hand the car back at the end of the term.

A simpler solution if your Trustee is not agreeable would be for you to hand the car back at the end of the agreement and your family can then buy another vehicle over which you have no title and therefore neither does your Trustee.

Mark

I wouldn't get your hopes up on the 1-year thing, ryn85.

What date did you sign your Trust Deed on?