It is your trustee’s duty to realise the value of your assets for the benefit of your creditors; for most people, their most valuable asset is likely to be their 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. Equity is defined as the value of your property minus the amount of any mortgage or secured loan.
Your trustee will advise you on this and will discuss the various measures available to avoid selling the house on the open market. They may, for example, allow another family member to buy out your interest in the property or let you arrange a remortgage at the end of your trust deed in order to release some funds.
What happens to my home if I am in a protected trust deed?
Trust deeds can either be ‘protected’ or ‘unprotected’. An unprotected trust deed is done without the agreement of your creditors and does not provide any legal protection. A protected trust deed on the other hand, is legally-binding on all parties and prevents any further action being taken as long as the terms of the trust deed are adhered to.
If your trust deed has been granted protected status it may be possible to exclude your home from it, meaning its value will not be taken into account when quantifying your assets and therefore you will not be forced to sell it. You are only likely to be able to exclude your property if you have minimal or negative equity. You will only be able to exclude one property from your trust deed with the rest of your assets passing to your trustee as normal.
