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[dencla1]

my husband and i have at the moment a trust deed and have been paying for 19months. it is due 2 finish in may 2014 and we have £6750 left to pay. we paid out at the start the equity on our property to the value of £7000. the total amount of debt was £25000 and roughly will be paying back £21000. due to ill health my husbands insurance policy has paid out to the sum of £96000 this covers the full amount of mortgage left to pay. the trust deed company at moment are waiting to hear from insurance company to see if there is a surrender value to this policy and are unaware at present they have paid out in full. what happens now? can they take the full £96000 or just what is left of the debt to pay?

[Steve Jackson]

Hello dencla1 and welcome to the forum.

This life insurance payout will be treated as a windfall. The good news is that your Trustee is not entitled to the whole £96,000. However they can take up to the full amount of the origional debt, plus an amount to cover their fees. They could also charge statutory interest on the debt for the time you have been in your TD.

From what you have said, you have already paid c£14250 into the Trust Deed. Given the original debt was £25k, this means that the Trustee will be entitled to the additional £6750 to pay the debt in full. The Trustee will not be able to charge their full fees as the Trust Deed is completing early. They will charge their nominee Fee + 2 years supervisory + probably a variation fee to close the TD early. I would have thought that these would total c£3000-£3500 but you need to check your TD documentation to get a better idea of fees. As such I would think the Trustee will want you to pay c£10k-£11k plus some interest so I would have thought you would not look to be paying more than £15k in total out of your lump sum.

You need to speak to your Trustee asap and let them know that you have received the payment in full and need a final balance from them so it can be paid. If they are talking anything more than £15k you really need to question it.

[markmcfadyen]

Hi Dencla

To complete the trust deed on this basis, you would need to pay the following;

Debts in full
Interest @ 8% per annum
Fees and outlays of the Trustee

Mark

[Hayden]

I assume that the 8% interest you are referring to is the statutory interest chargeable Mark? Is that 8% from the date the Trust Deed started?

[markmcfadyen]

Hi Hayden

Yes, statutory interest at 8% would be calculated from the date of signing the trust deed.

Mark

[James Falla]

Hello Dencla1

As has already been confirmed by the other posters, if you have received a large windfall while you are in a Trust Deed then you will be obliged to pay 100% of your origional debt, statutory interst of 8% per year from the date your Trust Deed started based on the total origional debt and the associated fees and costs of your IP. You should be able to get the amount of these fees from your origional Trust Deed proposal. However as Steve has rightly said, because you have only been in your Trust Deed for about half of its origional length then the supervisory fees should be reduced although you will probably have to pay a variation fee as well.

The remaining funds will then be yours and your husbands to pay off your mortgage. If there will not be sufficient to pay the mortgage in full, then depending on your on going circumstances, your IP might be willing to take a slightly reduced amount to help in this respect. However this is not guaranteed.