Hi Stevie0398, and welcome to the Forum,

Your Trustee is correct, any shortfall in the house will fall into your Trust Deed. Assuming you are no longer in the house, I would advise you to send the keys back, and ask to Voluntary Surrender the property. This can make the repossession slightly quicker, I am sure you really want to get this over with ASAP. If you return the keys, make sure they are sent Recorded Delivery. Your Trustee obviously has no financial interest in the house if it is over-secured, but please keep them in the picture, as the Trustee still had a vested interest in the property.

This topic interests me. Does this mean that I were to seek rented accommodation, I could simply hand back my house with its negative equity and walk away? Can this be done part way through the TD?

Potentially SkintAlly.

Is that something you'd consider doing?

I hadn't really thought of it because I didn't know it was possible. I have a flat just now which is quite cramped for us with our daughter. Its OK just now but later on it might get tough. My biggest concern was how I would get away from it later on in life, particularly if baby No2 came along. I am assuming that i would have to find a rented property that didn't cost more than my mortgage. Does this have to be done before TD is agreed?

I suppose this really would be verging on bankruptcy at this point?

It's an interesting point SkintAlly.

Many of the posts on this subject here have related to a change in circumstances that have made the mortgage payment unaffordable. For example, situations where a couple decide to part their ways.

I'm not sure whether the same would hold true where the property was left for a different type of reason. I'm sure our experts will be able to tell us/you soon enough though!

It is possible that your trustee might decide that you should be sequestrated instead, given that the amount available for your other creditors would be diluted by any shortfall that has to be added in. However, I think it would depend on the circumstances - principally how much the shortfall to the mortgage lender is likely to be, what the reasons were for the decision to surrender the property.

If by moving into a tenancy it meant that you could afford to pay a higher contribution to your trust deed then this might go a long way to enabling you to stay in the trust deed and not be sequestrated.

Probably best to discuss with your trustee before making any decisions - and look for any reply in writing.

Hi

The shortfall does fall into the Trust Deed, even if it were not included at the beginning. However, as Kevin says, your Trustee may not be happy depending on why you want to leave the property. Most people leave due to seperation,house not the right size, or they simply can't afford the mortgage. More often than not, this is decided at the beginning and is therefore included as a creditor right at the start. Speak it through with your Trustee though, and you may find he is quite happy for you to walk away from it. Remember the proposed divided to creditors at the beginning is exactly that - 'proposed.' Things can always happen that change a Trust Deed, sometimes for the better, sometimes not for the better. Hopefully your Trust Deed would not seek to Sequestrate you, as it really isn't in the best interest of your creditors.

Thanks for the replies folks. This certainly opens up a can of worms. As mentioned above, my biggest concern was that later on our flat becomes to small for us, and with the negative equity we wouldn't be able to move on. If the decision was made to move into a tenancy, then the rental payments and council tax would probably be significantly grater than the costs that I have just now and with the increased volume of debt and decreased ability to pay contributions. I would imagine that a request would be made for me to become sequestrated. I guess there has to be a point where creditors draw the line. Who decides how much you can afford to pay in rental costs? Apologies for all the questions 🙁

Hi SkintAlly.

All of these decisions about what you do with your house, how much you pay in rent and so on, are only yours to make.

Your Trustee then has to decide what the appropriate outcome is based upon the ramifications to the parties to the trust deed.

As Kevin and Shona suggest, I think the right thing to do would be to discuss any potential changes with your Trustee in advance so that you can weigh up the possible outcome as part of your decision.