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Sell Your House Whilst in Trust Deed? UK Property Laws

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Scott
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Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

Learn more about Scott
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Janine
Janine Marsh Profile Picture

Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Mar 7th, 2024
Could you legally write off some debt? Answer below to get started.

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For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

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Featured in...
Sell Your House Whilst In a Trust Deed

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Are you searching for answers about selling property held in trust in the UK? You’ve come to the right place. Each month, our website is visited by over 170,000 people trying to learn more about different debt solutions.

In this article, we’ll explain:

  •  What a trust deed is and how it works
  •  If you can sell your house while it is in a trust deed
  •  How your trustee works out an equity amount
  •  What happens to your property if you have little or no equity
  •  How a protected trust deed affects your property

According to the Money & Pensions Service, 700,000 people are either in problem debt already or are at risk of experiencing problem debt.1 We know how difficult it can be to face these problems.

Don’t worry; our team is experienced in dealing with debt, and we’re here to help you understand and find a way through.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

Can I sell my house while it is in a trust deed?

You could be able to sell your house in a trust deed. However, this is only possible if your trustee agrees with selling property during a Scottish trust deed.

Trust Deed Breakdown

Before we dive into the details of selling a house while it’s in a trust deed, let’s first break down its key components. This will give us a clearer understanding of what’s involved.

Trust Deed Aspect Details
Average Length
Typically 4 years; varies based on individual circumstances
Eligibility Must be a resident of Scotland with unsecured debts of at least £5,000
Assets High-value assets like property and vehicles may be included in the arrangement and may have to be sold to pay off debts
Credit Impact Credit score is negatively impacted and stays on your credit file for 6 years
Debt Types Included Unsecured debts such as credit card balances, personal loans, overdrafts, store cards, catalog debts, and some types of tax and utility arrears
Debt Types Excluded Secured debts such as mortgages and secured loans, court fines, child support arrears, Social Fund loans, student loans, certain taxes, hire purchase agreements, debts from fraud and debts incurred post-Trust Deed
Monthly Payments Based on what you can afford, reviewed annually
Creditor Contact Creditors typically can’t contact you directly or take legal action for debt recovery
Discharge from Debts Most remaining unsecured debts are written off at the end, assuming compliance with all terms
What You Can Do -Keep daily essentials and work-related tools
-Continue using current bank accounts
-Stay in your home, but equity may be used to repay debts
-Live and work abroad, with trustee’s agreement
-Receive certain types of income, benefits, and pension
What You Can’t Do (without trustee’s permission) -Incur new debts over £500
-Acquire significant-value assets, sell or alter assets
-Refinance or secure additional loans
-Change jobs, act as a company director, or hold certain public positions

Can I remortgage my house while in a trust deed?

Possibly, you could be able to remortgage your house.

However, the fees for remortgaging or altering your property’s balance of ownership could be significantly high. 

Credit reference agencies will be updated about the circumstances if your trustee allows. This could help make them less inclined to your loan as your credit score will not be as good as it could be.

I suggest you visit a mortgage broker for better advice about refinancing during a trust deed.

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Situation

Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

Get started

How will a protected trust deed affect my property?

If you have a sufficient amount of equity in your home, your trustee will consider that while making your repayments. 

Trust deed payments will be taken from your income to make monthly payments. However, the equity in your home could help boost the amount your creditor will receive. 

Can a Scottish trust deed affect my property?

A Scottish trust deed could make it difficult to get a mortgage or a loan in the future. You could be forced into selling your property as well.

Also, your credit rating could be significantly affected for a period of 6 years.  

How will my trustee arrive at an equity amount?

It is important to understand that your home is professionally valued.

If you have a mortgage, you could be able to get a redemption from your creditor. Moreover, the redemption amount is the sum required to repay the mortgage.

This is deducted from the total valuation to arrive at the equity.

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

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I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

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What will happen to my property if I have little or no equity?

If your property’s equity amount is less than £5,000, your trustee might not include it in your trust deed arrangement. 

Moreover, if you decide not to sell your home, you could be able to apply to the sheriff’s court. This could help delay or cancel the sale of your home. 

» TAKE ACTION NOW: Fill out the short debt form

How can I avoid selling my house in a trust deed?

One of the biggest things people worry about is the effects of a trust deed on home ownership. If you are a homeowner, you could avoid selling your property. 

There are many things you could do, such as:

  • Making payments in instalments: 

By extending the terms of your trust deed, you could make instalments. If your property is jointly owned, you could ask your partners to help contribute to the instalments.

  • Friends and family could make your instalments: 

You could ask your friends and family to help raise money in their account to pay your trustee and invest in your property.

  • Your joint owner could buy your share:

In the case of a jointly owned property, your partner could buy your share of the property and remortgage it in their name. 

  • Investments made by your joint owner:

Your joint owner could pay some of the equity to reduce your liability. 

  • Sale and rent back:

This means you could sell your house to a private firm at a discount and then rent it back. However, this can be risky.

I would suggest you get legal advice to understand which option is the best for you. 

Frequently Asked Questions (FAQs) 

How will my trustee use my property to pay off my creditors?
At the beginning of your arrangement your trustee will suggest a sum of equity. This will have to be paid at the end of your trust deed. The amount will be calculated based on the amount of redemption you will get from your bank.
Is my parents property taken into account if I live with them?
If you are in a trust deed and you live with your parents, their property will not be taken into account. Assets taken into account will be based on your consent. However, if they volunteer, their property could be added to your trust deed agreement.
Can I apply for a protected trust deed if my home is jointly owned?
You could apply for a trust in this case. However, your trustee will need permission from your partner. If your partner agrees and a division on sale has been granted, your trusteed will then proceed with the arrangement.
Do I need to inform my landlord before I get into a trust deed?
If you live in a rented house, you are not obliged to inform your landlord about your arrangement. However, if you move to a different property and a rental check is carried out, you might not pass.
Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

References

  1. Money & Pensions Service – Financial wellbeing in Scotland
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The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Debt Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.