You will not pay ANY setup fees whatsoever; this includes assessment fees or administration fees.
The trustee fees charged will not affect the actual amount you will be required to pay to the Protected Trust Deed (PTD).
Your trustee (Insolvency Practitioner) will charge for their time for administering your Trust Deed, this charge is taken out of the 'pot' that you pay into. You will pay a flat fee every month throughout your Trust Deed based on what you can afford to pay. (This will most likely be three years).
See below, we have used a typical example of a person who may be repaying their debts through a Protected Trust Deed (PTD).
The regulatory body that oversees the process is known as the Account in Bankruptcy (AiB) and within their guidelines they stress that a trustee MUST give an individual an indication of their fees, prior to signing. Trustee fees vary from company to company but are capped and have to be approved by the regulatory bodies TIX and Grant Thornton, this depends on who is your main creditor is.
Example of Trust Deed fees and terms of repayment:
| Agreed monthly payments (Typically x36 months) | £200 |
| Trustee Fee excluding VAT and outlays | £2500-£4500 |
| Total repaid by individual (including fees above) | £7,200 |
| Total debt written off at completion including fees | 65% |
The example above is based on a person who owes approximately £21,000 of unsecured debts (credit cards, personal loans and store cards etc.) who completes their PTD within 36 months and is not a home owner.
The PTD fees will have no impact on the amount you're required to pay monthly. Remember that the monthly payment you make will be based on how much you can realistically afford to pay without taking up funds you need for essential expenses: mortgage/rent, utility bills, food, etc. Also if you own assets such as a home or car, the value of your assets will be taken into account.
This fee will be agreed with you and confirmed in writing at the start of the agreement, when the terms of the Trust Deed are determined. Your Trustee will draft your proposal (which informs creditors what they can expect in regards to the repayment of your debt through the Trust Deed).
In order for your Trust Deed to become protected by law, over 50% of your creditors or 67% of the overall debt value must agree to the proposal. Excessive Trustee fees will reduce the amount that your creditors receive in repayment and therefore your Trustee should only charge fees that will result in a satisfactory outcome for you, their client.
The Trust Deed fees are explained as follows:
Your Trustee will handle the day-to-day running of your Trust Deed. They'll deal with any issues that could arise while your Trust Deed is in progress, deal with your creditor's contact and administration and become your sole point of contact.
Most Protected Trust Deeds run smoothly for the duration of the repayment however, should your circumstances change, such as loss of employment or pregnancy, your Trustee may be able to arrange a variation* and therefore help the Trust Deed draw to a successful conclusion.
Every month, you shall make a payment to your Trustee and this payment will be stored in what is known as a creditor's pot. The actual timing of this deduction will vary depending on your case. The flat fee will be deducted from this creditor pot and once that has happened, your creditors will receive their payment.
Once you have complete the agreement, your Trustee will handle your official discharge from the PTD and you will then be free from your unsecured debts.
Further considerations:
The monthly repayment that you propose to repay should be based on your affordability to repay debt and it is important that you only propose a repayment that you can realistically afford to repay over a minimum of 3 years.
As this then becomes a legally binding agreement you must then keep up your monthly payments in your Trust Deed. If you are unable to keep up your agreement, your Trust Deed may fail and this could leave you worse off financially as you will then be liable for the remaining balance and any costs already incurred.
Additional you could be sequestrated (made Bankrupt) and your home as also at risk if you are a homeowner.
Prior to signing a Trust Deed, your Trustee is obliged to inform you of the consequences of using a PTD to write off your debts and to advise you on alternatives such as the debt arrangement scheme or certified sequestration.
By law, you will also be given a copy of the Scottish Government's Debt Advice and Information Package by your Trustee.
As a provider of ethical debt advice, Trust Deed Scotland aim to only suggest using a trust deed to manage your debts when it highly probably that you may successfully gain protection status and that the pros and cons are explained to you in full. You will not be pushed into making a decision and there will be absolutely no pressure or obligation to proceed if you do not feel comfortable.
* A variation is a change to the terms of your repayment, based on the changes to your circumstances. Typically this may involve extending the length of duration of your trust deed repayment.
Where a visitor to this site makes a decision to use one of our recommended companies to arrange their Protected Trust Deed or Debt Arrangement Scheme part of the fees will be paid to Kelsom Ltd to cover the element of the work we have done.