In a Trust Deed if you have equity in the property then this needs to be paid into the Trust Deed for the benefit of the creditors. The equity is then paid to the creditors at the end of the Trust Deed. You don’t get this back.

For example, if you have £10,000 of equity in the property then this needs to be paid into the Trust Deed. Your wife could pay this in by making monthly payments over 4 or 5 years. Over 4 years this would be a payment of £208 per month. When it comes to paying over the equity you don’t top up your mortgage or borrow money against the house.

In addition to that if you are working and can afford to make a monthly payment you are required to pay a payment for 48 months on top of the payment for the equity.

Imagine I owed you £50,000. You would want as much of this back as possible and if you knew I was working you would want to know my income and expenditure to see if I could afford to pay a payment per month. Also if you knew I owed a house you would ask me about this and how much equity I had and you would want some of this to get as much of your £50,000 back as possible.

Have you managed to look into opening up a new bank account?

Well... we all seem to have switched on our computers at exactly the same time this morning!

It sure does! 🙂

It's like buses in here some times! [:)]

Thanks everyone for their response.

So if I have this correct, if I have £50k of debt and £10k of equity in my property I agree to make a payment towards the debt and a payment towards the equity.
The equity must be paid in full but the debt is only partially paid then written off once the trust deed is completed?

I also have the option of a third party paying the equity over the period of the TD.
In both cases the £10k must be paid in full though.

Is that correct?

@David
Yes I have another account I can use for wages to go in to that is not linked to any of my creditors.

It can be like that sometimes. Good to see all of our response are similar.

Yes you’ve got that pretty much correct. Your payments per month and the equity amount paid in is combined and this amount is paid to the creditors and the balance of the debts written off.

Good to hear you have another account. Is it with the BOS or Halifax? Those banks can be problematic.

Also, have you thought about speaking with your employer about the Trust Deed to double check it won't impact your job?

Hi DW2015.

It's all really a payment towards your debt.

The first element of payment is your surplus income. This gets paid for a minimum term of 4 years.

The second element of payment, if appropriate, is a payment in lieu of the assets that you own. These assets would include any equity in your home. Sometimes this can be done by adding extra monthly payments on at the end of the 4 year term. Other times a third party might step in and make the payment.

Firms may allow a certain minimum level of equity to be excluded. This is to represent the significant costs that would be incurred in the event that the asset were actually sold instead.

I think another key point is that a valuation of the property would get done before any trust deed began. This would fix an equity amount, which might turn out to be less or more than £10,000. So you're really only going to understand how this would actually work for you in reality by working with a firm to go through the first part of this process. This can be done without any cost to you and without any obligations being put upon you.

It's happened again.

18 seconds apart!

No way happened again! I think if I recall there has been a time whereby approx. 5 seconds separately a post between us TDA.

TDA makes a really good point about at this stage working directly with a firm and expert to really confirm exactly how a Trust Deed would work based on your situation.

That would allow us to value your property and confirm the exact equity and how much of this would be paid over. When it comes to valuing your property you don’t need to let anyone into the house to do this so don’t worry. We provide a chartered surveyor with details of your property and from that they can carry out a valuation. I can normally have a valuation back the same day I request it so things can be calculated pretty quickly.

If you then decided to enter into a Trust Deed then the amount of equity that will be paid in is confirmed in a statutory form called a Form 1B Agreement in Respect of the Heritable Property which is what Paul referred to in his post. This is signed by both you and the Trustee and is the formal agreement.

To proceed to the next step you would also need to provide 3 months bank statements and 3 months payslips along with some ID and evidence of all the debts. All standard stuff to enable a Trust Deed or even a DAS to be set up.

How are you feeling about things now DW2015 after reaching out for some advice and help on the forum? Hopefully starting to feel a little better.

quote:

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Originally posted by David Tannock
[br]It can be like that sometimes. Good to see all of our response are similar.

Yes you’ve got that pretty much correct. Your payments per month and the equity amount paid in is combined and this amount is paid to the creditors and the balance of the debts written off.

Good to hear you have another account. Is it with the BOS or Halifax? Those banks can be problematic.

Also, have you thought about speaking with your employer about the Trust Deed to double check it won't impact your job?

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Thanks David. Account is with Natwest.

I'm assuming that a TD would preclude you from becoming a shareholder or holding office?

If that's the case I don't think a TD is the correct solution.

Hi DW2015.

Can I ask what type of office you're refering to? If it's to serve as a company director, then a trust deed itslef does not prevent you from doing this. The thing to check would be the rules of the company itself. There's more information about this at:

https://www.trust-deed.co.uk/self-employed-company-director.html

This page also touches on the topic of owning shares in a small business. I appreciate you may not be refering to a small business, so please let us know if the article doesn't answer your questions.

Hi DW2015

Seems I was the only expert on here not logging on early yesterday morning!

Looks like all of your questions have been answered so far. I would just highlight a point that TDA made about the possibility that some equity can be "excluded". If there is reasonable justification as to why the full value of the equity can not be paid across then it is commonplace for a lower amount to be proposed instead. Given that the only other alternative for realising equity would ultimately be selling a property and the significant costs involved in that, it is rare for such proposals not to be accepted, in my extensive experience dealing with such situations.