Glossary of Terms
• Apparent Insolvency – means you are unable to pay your debts, and at least one of your creditors has taken legal action against you.
• Debt advice and information package – The Scottish Government’s booklet that provides information about dealing with debt.
• Equity – The value of an asset, such as a house or car, minus any outstanding finance, e.g. a mortgage or car loan.
• Insolvency Practitioner – A person licensed and authorised to act as Trustee in a Trust Deed or Sequestration.
• Protection – Once you have signed your Trust Deed, your creditors are given five weeks to object to the terms of your Trust Deed. If any objections equate to a specified minority in value and number the Trust Deed can become protected.
• Proposed Scheme of Division – A financial summary showing what monies you are pledging to pay into the Trust Deed, and also the expected costs of administering the Trust Deed, and what the creditors can expect to receive in settlement of their debts.
• Statement of Affairs – A summary of you current financial position, showing what assets you have, and what debts you owe.
• Trust Deed – A legally binding agreement between you and your creditors where you agree to make regular contributions from your income, and/or to surrender certain assets to your Trustee who then deals with your creditors on your behalf, including paying them a proportion of the amount you owe to them.
• Trustee – A Trustee is appointed to oversee an insolvency solution to ensure all assets are made available for the creditors.
• Wages Arrestment – A wages arrestment orders an employer to deduct and distribute funds for the direct benefit of the creditor.
As part of the preparation of your Trust Deed paperwork a current valuation of your property will be obtained. This will be based on a “drive-past” inspection of your home, completed by a professional surveyor. This value will be included in the Statement of Affairs we prepare for you. Should you disagree with this valuation you may, at your own cost, obtain an alternative professional valuation. This should be sent so as to reach us no later than 14 days after the date you sign the Trust Deed. The Trustee will then consider the most appropriate valuation applicable to the property and advise you accordingly of the expected funds you are required to pay into the Trust Deed. Should you not provide an alternative valuation within that timescale the Trustee will use the value disclosed in the Statement of Affairs, and the expected funds will be as detailed in the Proposed Scheme of Division.
For the purposes of the Trust Deed, the Trustee is willing to limit the amount of secured lending on the property to a maximum of 85% Loan to Valuation (LTV). This means that you are effectively retaining a portion of the equity.
For example if your property was valued at £100,000, and you had an outstanding mortgage of £50,000, the maximum funds you would be expected to pay into the Trust Deed would be £35,000.
This example is based on maximum secured lending of 85% LTV, or £85,000 in this case, and after deducting the existing mortgage of £50,000, gives an expected payment to the Trust Deed of £35,000 meaning you would be allowed to “keep” £15,000 of equity.
Please note these figures are for illustration purposes only.
Regardless of the amount of equity in your property the Trustee will register an Inhibition against the property preventing you from selling or obtaining further finance against the property without the Trustee’s knowledge and consent. This will be released immediately your equity ceases to be part of your Trust Deed estate.
Property Equity Release
The equity in your property may be required to be realised for the benefit of your creditors. Any co-owners share of equity continues to be “their share” and therefore is outside of your Trust Deed.
You may release this equity at any time by selling the property. A voluntary sale should be discussed with your Trustee, as they will need to approve the selling agents and solicitors used and their costs.
If you do not sell the property, your equity should be released by paying a lump sum, either by way of re-mortgage or by introducing an equivalent sum from a third party at any time during the term of the Trust Deed. However the inhibition on the property will not be removed until full amount of agreed equity has been paid.
In the event that you do release the equity in your property by re-mortgaging, it is recommended that you take appropriate professional advice from a qualified and regulated Financial Adviser or mortgage broker.
If you choose not to deal with the equity by selling the property or by introducing lump sum funds it may be possible to extend the duration of your Trust Deed so you can make an agreed number of additional monthly contributions in lieu of the equity.
Any such arrangement will be subject to approval of the Trustee, and if such repayments are for a particularly long duration this offer may not be accepted.
If the current total of secured lending is greater than the current valuation, i.e. you have negative equity; the Trustee’s interest in the property will be reverted back to you upon payment of an abandonment fee of £500. However the inhibition on the property will not be removed until full amount of abandonment fee has been paid.
Accordingly until such time as either the agreed equity release or abandonment fee has been paid your property could be at risk.
Further in the event that the equity cannot be realised your property may have to be sold. Please also note that it is your responsibility to ensure that the property is covered by buildings insurance, and evidence provided to the Trustee.
If your vehicle is worth more than £3,000, your Trustee is required to realise it for the benefit of your creditors. You will, however, be allowed to continue to use your vehicle in order to enable you to travel to and from work, so long as you maintain your contributions.
At the conclusion of the Trust Deed period, you will have a number of options. These will include surrendering the vehicle for sale or extending your monthly Trust Deed payments until an amount equivalent to the value of the vehicle has been paid in.
The use of the vehicle by you is conditional upon you maintaining adequate insurance, and having a valid MOT certificate. You must provide your Trustee with copies of your current insurance and MOT certificates and ensure that you also provide your Trustee with copies of renewal certificates on an annual.
You should not sell, trade-in or otherwise dispose of the car at any time without your Trustee’s prior authority.
Private vehicle registration
If you own a private registration number plate, the value of this will be established within the Trust Deed and this sum will be required to be paid into the Trust Deed for the benefit of your creditors. Life policies – If you have a life policy, steps will be taken to confirm any surrender value, and this will be required to be paid into the Trust Deed.
If you have shares, they should be sold and the funds received must be paid into the Trust Deed for the benefit of your creditors.
If you have savings in your bank account at the date of signing the Trust Deed, you will need to pay this to the Trust Deed for the benefit of your creditors.
Taking Care of your money
Payments made by you in relation to your Trust Deed are held in an individual Trust bank account that is controlled by your Trustee and persons authorised by the Trustee to act on their behalf.
Money held in your Trust account will be used to pay the fees associated with your Trust Deed and then to make payments to your creditors. Under a special arrangement with the bank that operates your Trust bank account, no bank charges are payable for the operation of your account.
However, your Trust bank account receives a lower rate of interest and at times when the Bank of England base rate is low, your Trust bank account may receive zero interest.
Legislation requires that your Trustee takes out insurance to protect any of your assets that are under the control of the Trustee. This means that you are protected against the consequences of fraud undertaken by your Trustee.
Contact your Trustee immediately if believe that there have been any errors in the operation of your Trust Deed or your Trust bank account.
How your information is used
Your information is used to service your Trust Deed, improve the service that is delivered to you, assess financial risk, prevent and detect crime and aid asset recovery.
Where relevant, your information may also be shared with other organisations. Unless you have indicated otherwise, your information might also be used to contact you about products and services that you may find interesting. Please contact your Trustee if you do not want to receive such communications.
You can request in writing a copy of the personal records held on you and you may be charged for providing you, with this information. Your Trustee can also provide you with details of the fraud prevention and credit reference agencies used, so that you can request from them copies of the information that they hold on you.
Communicating with us
Generally communication between us will take place either through the post, on the phone or via e-mail. You can write to us at:
MoneyPlus Advice Riverside, New Bailey Street Manchester, M3 5FS
You may phone us on 0161 837 4000 between 8am – 8pm, Monday to Thursday and 8am – 6pm on Friday.
You may e-mail us at firstname.lastname@example.org
You are responsible for ensuring that your Trustee has your up to date personal details and bank account information. You must let your Trustee know of any changes in good time. If you provide (or let your Trustee continue to use) incorrect or out-of-date information, your Trustee will not be responsible if a contribution payment is not collected or if important information does not reach you.
If your Trustee cannot contact you for an extended period of time, your Trust Deed may fail and there may be serious consequences including the possibility of you being made bankrupt.
If you contact us over the phone you will be asked a series of questions to confirm your identity. Please have your reference number to hand.
If you feel that there is cause to complain please write to your trustee with the full details. Your complaint will be investigated carefully and promptly, and appropriate action will be taken. Most disputes can be resolved either through the provision of further information.
However, in the event that you have exhausted our complaints procedure and you are not satisfied, you may ask for the complaint to be referred to the regulatory body that licences our Insolvency Practitioners.
Any such complaints should be forwarded to the Insolvency Gateway, which is operated by the Insolvency Service. They will record your complaint and forward it on the relevant regulator. You can contact them at IP Complaints, Insolvency Service, 3rd Floor, 1 City Walk, Leeds, LS11 9DA, by telephone on 0845 602 9848, or by email on email@example.com. The required complaint form can be found on their website: www.bis.gov.uk .
In accordance with the Provisions of Services Regulations 2009, the company’s professional indemnity insurance is provided by Brit Insurance of 55 Bishopsgate, London , EC2N 3AS.