Will I Lose My Home If I Enter Into a Trust Deed?
December 5, 2013
A trust deed is a common debt repayment programme based around a voluntary arrangement made between you, your creditors and a qualified independent ‘trustee’ who takes control of your debt repayments for a period of 48 months.
If you’re having difficulty paying your debts and have assets or a regular income, you are likely to qualify for a trust deed. The programme ensures that you are protected from legal action and creditors can no longer chase you for payment; instead they must deal with your trustee.
But where do you stand as a homeowner?
It is your trustee’s duty to realise the value of your assets for the benefit of your creditors and your most valuable asset is likely to be your home. Unless your home has been excluded from your trust deed by agreement with your creditors, the property might be transferred to the trustee in order for equity to be released and the resulting money paid to creditors.
Your trustee will advise you on this and take measures to avoid selling the house on the open market. They may, for example, allow another family member to buy out your interest or for you to arrange a remortgage at the end of your trust deed.
If your creditors do not object to your trust deed becoming protected, your home will be excluded from the Protected trust deed and the rest of your assets pass to your trustee as normal.
It is essential that you continue to make repayments on your mortgage on time after signing a trust deed; after all, your mortgage is a secured loan which means a trust deed cannot prevent repossession if you fall behind on your mortgage.
If you have no equity in the property, or if there is not enough to be released (less than £5,000 in equity), you would still be required to sign it over to the administration of your trustee. This is because in some cases a property may be worth more at the end of a trust deed arrangement than it was at the beginning. Thus, if there is currently little to no equity in the property then the trustee may have a valuation done at the end of the arrangement to see if there is any equity that can be released at that time.
For further information or to discuss your personal circumstances, contact our expert team at Scotland Debt Solutions today.
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