Looking for some advice regarding equity based Trust Deed:
Helped get my parents who are pensioners into a TD at the end of last year after I found out they were becoming ill with worry over debt. Got some great advice from Trustees who were great to deal with. The problem now is they are just as ill as they have no life now as they don't even have £300 to see them by every month. My dad would like to try & get a job to try & give them some sort of life but is worried if he got a job say earning £500 a month, which would give them a comfortable 2.5 years, he would have to pay all that money to the trust, this would in turn make him no better off.
The trust is equity based, I think it is overall £44000 based on equity on house. They pay £280/ month with a final payment of £32000 at end of TD. I've also been thinking if I could somehow come up with this money to pay the trust off early, then hopefully be in a position to possibly sell the family home. I know this probably wouldn't be allowed but I see my parents faithfully paying all this money every month then having barely anything to live on making me think I've made a mistake getting them into the Trust.
I try to help them as much as I can with payments but with 2 young kids it is now starting to affect my family life as well.
Any help or advice is appreciated.
Welcome to the forum Redbus.
What happened to any earned salary would probably be at the discretion of the trustee. Some communication is therefore required to find out if this work would be worthwhile. It may well be, perhaps with some kind of split involved.
Are you trying to avoid the sale of their home later?
How might you raise the agreed lump sum?
We were hoping to avoid the sale of the property at a later date, but the raising of the agreed lump sum would probably force this at some point. I was hoping to try & raise the agreed lump sum through my mortgage, and then once parents debt free we could take it from there.
I just want to try & make this a bit more bearable financially for them during the TD and then hopefully get some sort of life back, it just seems to be playing more on my mind as they are pensioners and I hate to see them with nothing but I feel it's affecting me now which in turn is affecting my family life.
It's not an easy situation, Redbus. It is possible that the trustee might allow your father to earn some amount of extra income without having to pay a contribution from it in addition to the equity payments, so no harm in asking.
Otherwise, what you suggest regarding remortgaging etc might be a viable option.
Hi Redbus,
Try not to be too hard on yourself for assisting your parents in setting up Trust Deed's. I assume at the point in time that they set this up there was a reason for doing so. Sometimes it can be the threat of legal action or extreme pressure from creditors and by entering into Trust Deed's it can in the short term assist with these difficulties by providing breathing space and a little security.
If your parents budget is extremely tight and under the guideline expenditure figures then it could be argued that any increase in household income is supporting their expenditure. How easy do you think it would be for your father to secure employment? Are there many jobs in the area etc?
When are their Trust Deed's due to finish and the lump sum payment become payable? It may be possible for your parents payments to be reduced for the remaining period with an increased lump sum payment at the end to compensate. It's worth asking.
I would organise for your parents to speak with their relationship manager/Trustee. If they are not comfortable speaking on the phone about it perhaps organise a meeting for all of you to sit down and discuss things to see if there is a workable solution.
David is not currently posting in the Trust-Deed.co.uk forum
Thanks for all the helpful replies. It really does help when you read some of the posts on here & realise you are not on your own.
We're only 6 months into TD so,we have another 2.5 years left. Ideally if my dad could get a job, this would help him get by over the next few years & then pay the Equity at the end. The only stumbling block would seem to be getting a job then finding how much the trustee would take off .
No harm in approaching the trustee first to see if they would be able to give them any assurances about how they would see such a plan. They may even be willing to give some firm figures as to how much could be earned before they would start asking for a contribution.
How do you hope to raise the £44,000 in 2.5 years? What was the plan when the TD was up??? I'm just worried for you in that my situation was similar in that I had to raise £ 20,000 odds but couldn't remortgage and the back-plan that was put to me wasn't actually possible in the end I had to borrow the money. Good Luck.
The plan is after the 2.5 years the final payment will be 32000, I would hopefully be able to get this on my mortgage to get my parents debt free. Think best thing may be to try & get a job first & foremost then see if the trustees would want anything extra.
Since this all started I have looked through the insolvency register & noticed quite a few people I know on it who are in trust deeds, most of them have reasonably comfortable lifestyles just now, just hoping to try & get the same for my parents.
It might make the amount to raise at the end higher, but could the payments be reduced might be worth speaking to the Trustees and advise that they will end up missing payments if they can't be reduced. It might help a little
As a general rule in the circumstances described we would use the calculation that you can earn 10% of net income and seek 50% of the balance.
As an example if net household income was £2300, then the 1st £230 is excluded and as a maximum we would look at 50% of the balance. So if the increase was to increase income by £500, then the maximum we would seek would be 50% of the remainder (£135)
I hope this makes sense on a Saturday morning!
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Thanks very much for the reply on a Saturday morning Mark, I think Ive got my head round that. So if my dad got a job and say earned £700 a month over and above his £2300 monthly income just now then you would seek £235?
Hi Redbus
Yes, as a maximum amount. I've never thought it fair that people should lose the majority of overtime or bonuses etc as it stops them doing it and therefore no one wins.
Mark
Mark is not posting regularly in the Trust-deed.co.uk forum.
Thank you very much for that info Mark. Looks like we can hopefully start job hunting then and see what comes of that, fingers crossed.