E for Equity

We all know how important the property market is for those in debt. If you are struggling with debt issues, then realising equity through property can be one way to cope.  

One case I dealt with a few years ago seemed at first to hinge on property prices. Looking more closely into the situation however, my clients and I managed to come up with another solution.... 

Mr and Mrs Richards turned to me for help after Mrs Richards lost her job and remained unemployed for a year. The family, which had been reasonably comfortable before, began to struggle as she found it hard to secure further employment.

When I met Mr and Mrs Richards they were in a debt management plan which had reduced their outgoings from around £800 to £410 a month. During this period however, Mrs Richards managed to get a job. As a result the Richards felt that they wanted to deal with their debts and move forward, which is why I suggested a Protected Trust Deed. 

Mr & Mrs Richards jointly owned their property with equity calculated at £29,000. It was agreed that their monthly contributions would be £254 each for 36 months with a review to realising the equity at a later date. 

Mrs Richards' estimated debts were £31,700 and Mr Richards' estimated debts were £33,790 – debts made up loans, overdrafts, credit cards and utility bills. 

Mr & Mrs Richards maintained their contributions and after all 36 monthly contributions were made the trustee and debtors then looked at their options available for realising the equity from their property. Due to the economic downturn, unfortunately they were unable to successfully realise any funds from their property.  

After reviewing the debtors’ situation further and examining the property market an offer was made to their creditors to extend their trust deed for a further 24 months in order to allow them to contribution towards the trustee's interest in their property and also allowing them peace of mind that they would not have to consider the possible sale of their home in order to release the funds.