I know it's probably a bit late to ask this, me being finished and everything but there seems to be more questions about this coming up. I'm struggling to understand what it's for. I remember being told when I signed that if there was zero or negative equity in my property, I could pay £500 to protect that position should that change. How does this relate to creditors? I can't imagine my extensive list all being happy had my trustee contacted them saying there's no equity just now but we've got £500 off the client so that's fine. I just can't work out how it relates to everything, especially seeing as there's been a few occasions where the client has had to pay the £500 and the equity.
Given that none of our lovely experts work for firms that take this money, it's probably the wrong place to ask. Might help anyone getting into a trust deed understand the position.
Nothing left to discharge - everything's done and dusted!
I would imagine that this figure is to remove the trustees interest and goes in their back pocket!! Harsh but I bet it doesnt all go to creditors,thats for sure.
Paul
Trust deed completed Jan 2012,Trustee discharge Nov 2012.
A new dawn.
I'm sure it'll come under 'fees'. I'd like to know how they get this past the creditors though. Given the hourly rate, I can't see £500 going far. Also if it isn't a standard charge - some firms don't charge it, does it go straight to the fees pot?
Nothing left to discharge - everything's done and dusted!
Whilst I can understand your scepticism, this is not a fee.
A trustee's job is to gather in whatever is available for the benefit of creditors. Some choose to try to boost the amount available for creditors by asking for an extra £500 if there is a property involved but which has little or no equity.
This is perfectly legitimate and is commonly done across many insolvency firms. It is quite possible that they will seek to get creditor approval to retain a portion of this money in return for the extra work done in gathering it in.
RSM Tenon choose not to request this payment in trust deed cases. In our view, the amount of to-ing and fro-ing that can be involved in trying to collect a 3rd party payment like this, combined with the embarrassment it can cause for the person having to ask a friend or family to pay it, is not really enough justification for requesting it in the first place. Especially so when you consider the benefit to each creditor once shared between them is likely to be negligible.
Kevin, your last paragraph is exactly why I don't understand other firms (my IP included) charging this fee. It also shows that while you have to act in the interests of the creditors, some firms still show that they care about their client as well.
Nothing left to discharge - everything's done and dusted!
Hi gillian.
There's nothing wrong with firms choosing to charge £500 for this. Plenty do so quite legitimately and the creditors might receive a marginal increase in the dividend.
Just like with all industries though, different firms work in slightly different ways and sometimes interpret rules/regulations/guidance/best practice in slightly different ways.
Of course anyone starting a trust deed has a choice if their home has little or no equity. They can select a firm that will require them to find £500 from someone else, or they can select a firm like Kevin's/Mark's/Rob's/Chris's (and others) that don't charge it.
I know what I'd choose.
I spoke to ICAS re this about a year back during our monitor visit and they advised that the Trustee better have justifiable time charged against it to justify the payment. Nuff said in my books.
I think the new regulations are, at the very least, going to ensure that the equity position is calculated and agreed at the start and therefore the £250 or £500 or £550 or £750 or £1000 'payments' may fall by the wayside by default.
Let's hope so.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
The amount of clients i had in TD's before the credit crunch that were offered to pay £500 to release the Trustee's interest in their property that was in negative equity at the time, but chose to wait. 1 or 2 years later, £500 not paid, property re-valued (i know not relevant now) and loads of equity which cost them £10K-30K. For the amount of debt getting written off it is not a huge sum to have peace of mind that the property is removed from the estate. However, covering old ground we know there are firms that do not charge it which obvioulsy makes sense to use!
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Like I said it is not the be all and end all. 1 firm may charge £4K fees and no £500 for property. Another may charge £3.5K and £500.
ITS EXACTLY THE SAME! Look at the proposal and fees as a whole.
Rob is not currently posting in the Trust-Deed.co.uk forum.
Also I can confirm that in the majority of cases I deal with our time costs chasing this and dealing with the £500 in sequestrations (my firm does not charge it in TD's) are higher than the sum collected.
Rob is not currently posting in the Trust-Deed.co.uk forum.