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Simms Posted - 11 October 2020 : 16:55:45
I have just lost my job and unlikely in the current circumstances to achieve as high a paying role. My husband has the mortgage and everything else in his name only since we split up briefly before he brought the house.
What happens to my trust deed now if I can only afford to pay back a small amount each month?
If I go bankrupt would they make a claim on the equity on the property my husband has?
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TDA (Debt Adviser) Posted - 17 October 2020 : 11:40:08
Hi questionmark,

There is guidance for trustees about how to interpret these types of situations.

The reality however is that it's impossible to have a single set of rules because you couldn't begin to cover off the enormous variety of changes that can occur (through choice or through events outside of people's control) and the different context of each and every trust deed.

That's why a trustee has to consider each scenario on its own facts.

At the same time they also need to consider the interests of the creditors who agreed to a trust deed becoming protected in the expectation of receiving a certain amount of what's owed back.

For example, redundancy and long-term unemployment might look different to a trustee if you're 3 years into a trust deed rather than 3 months into a trust deed.

These issues are obviously going to be magnified over the coming months as lots of people suffer a fall in income that is entirely out of their control.

I do hope that you receive a sympathetic response and everything works out for you.
questionmark Posted - 16 October 2020 : 22:06:10
Hi Simms. I am sorry to hear that but I will be in a similar situation starting from next January.
Kevin - I think I shocked reading your response. Why you (TD) do not have a common strategy / protocol for handling issues like this? I got a new temporary contract extension (extended notice period ) with reduced pay. From 37.5hrs per week to 25. I have informed my TD about it and waiting gor their response. They immediately offered a payment break but I would like to pay with reduced monthly contribution. Reading your lines I might get an extra year extension instead of being discharged at the end of my official TD period (7 months only).
Kevin Mapstone Posted - 15 October 2020 : 16:21:43
I'm sorry to hear that, Simms. Unfortunately it's a problem a lot of people are likely to be facing up to at the moment.

I always think that this question should be top of the list for people to ask their prospective trustee when considering entering a Trust Deed - ie "what will happen if my circumstances change for the worse?".

It is important to ask because different insolvency practitioners approach changes in circumstances very differently. Most, if not all, will allow at least a temporary reduction or break in payments. Some will insist that the term of the Trust Deed needs to be extended to gather in the missed payments. If it is a long-term change for the worse then some trustees may use it as a reason to terminate the Trust Deed without discharging the person from their debts.

My own view has always been that a change in circumstances beyond your control should not be a cause for any extension or for termination. Your contribution should be reduced to whatever is affordable for however long is necessary, with the 4-year end date staying the same. Hopefully your own trustee is of a similar view, Simms.
Simms Posted - 12 October 2020 : 00:14:01
Thank you so much. I really hope they won’t.
TDA (Debt Adviser) Posted - 11 October 2020 : 21:16:53
Welcome to the forum Simms.

I'm sorry to hear that you've lost your job and that other new opportunities might come with a lower salary.

Trust deed providers are generally being very flexible about altered circumstances at the moment. There's a lot of it about and nobody usually wins when a trust deed fails for no good reason.

It may well be possible to continue your trust deed with a reduced payment. You shouldn't be penalised for events that were out of your control.

Even if your trust deed were to fail, it's pretty unlikely that bankruptcy would be forced upon you.

If the worst did happen (which I doubt it will) it shouldn't cause any problem with your home if your husband is the sole legal owner.

Best wishes with your search for new employment. It must feel like a really tough time at the moment, but I don't think things are going to work out as badly as you fear.

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