As with all Trust Deed and Debt Arrangement Scheme (DAS) providers, there are fees associated with these debt solutions. It is important that these fees are fully explained to you before you enter a debt solution. The information on this page provides you with a detailed explanation of the fee structure for both Trust Deeds and DAS.
Firstly, it is important to note that there are no fees for our advice and if you do not proceed with a solution there are no fees charged by us at all. Therefore, free debt advice is available from us, whether you choose to proceed with a debt solution or not.
Secondly, if you proceed with one of the two debt solutions provided by us (Trust Deed or DAS) then our fees are borne by your creditors and you will not pay anything over and above your one, affordable payment. That does not mean that your creditors pay our fees directly, the way it works is explained in detail below.
Protected Trust Deeds (PTD)
First of all, a PTD can only be provided by an organisation with a licensed Insolvency Practitioner (e.g. Harper McDermott Ltd t/a Trust Deed Scotland). That means organisations such as StepChange Debt Charity, Citizens Advice Bureaux and local authority Money Advisers cannot provide this solution. However, they can provide advice on this solution and, if suitable, will be required to pass you to an Insolvency Practitioner for further advice before you decide to proceed. Therefore, if a PTD is your choice of debt solution, the advice will be free, and the fees will be charged as described below – the fees are generally similar, regardless of your PTD provider.
Part of our role is to calculate what you can afford to pay to your debt solution, this is done by reviewing your income and expenditure. What you have left over after allowing for all your household bills and living expenses is deemed to be an affordable amount to pay to your creditors. The fees and expenses charged for a trust deed are taken from this payment. Effectively, this means your payment is split between fees and creditors and these are paid in a priority that is set out in legislation. As part of the legal process we must follow to have your Trust Deed registered as Protected, your creditors approve our fees and agree to the split of the funds. Your creditors will also monitor this throughout the term of your Trust Deed. More information is available below.
The fees and expenses of your PTD will be explained in detail in your Trust Deed paperwork. The fee structure is set out in legislation and is detailed below:
- The Trustee’s fixed fee for a 4-year Trust Deed ranges from £1,000 to £2,500, this will vary depending on the work involved in your PTD and your creditors’ acceptance criteria.
- The Trustee’s realisation fee is charged based on a % of the funds received into your PTD, this typically ranges from 10-20% of the value of the funds.
Your creditors will be advised of the Trustee’s fees and expenses in your Protected Trust Deed proposal. Should you feel it necessary, you and/or your creditors can request the Accountant in Bankruptcy (AiB), the Scottish Government Agency that supervises Protected Trust Deeds, to carry out an audit of the Trustee’s fee. The AiB charge a 5% fee for this audit, this reduces the funds that will be distributed between your creditors.
The fixed and realisation fees are based upon the amount of work undertaken to set up your PTD and to administer it during the 4-year term (can be longer, if required). Your Trustee along with suitably qualified members of his staff will undertake these tasks (this list is not exhaustive):
- Preparing and presenting your Protected Trust Deed proposal to your creditors.
- Obtaining protected status for your Trust Deed.
- Dealing with your creditors, the AiB and any relevant third parties on your behalf.
- Monitor payment of your income contributions.
- Realising any assets for the benefit of your creditors.
- Adjudicating on creditors’ claims.
- Paying dividend/s to your creditors.
- Dealing with any changes in your personal or financial circumstances during the PTD that could affect your payments and if necessary, liaising with your creditors regarding these changes.
- Carrying out an annual review of your income and expenditure
- Reporting annually to your creditors, updating them on the progress of your PTD.
- Finalising the administration of your PTD, processing yours and the Trustee’s discharge.
Based on our average PTD; the following is an example of the fees and expenses payable, the dividend payment to creditors and the possible debt write-off achievable:
- Monthly payment: £206
- Debt level: £21,460
- Payment term: 48 months
£ £ Total expected payments £206 * 48 9,888.00 LESS: Trustee’s Fixed Fee 2,500.00 Trustee’s Realisation Fee 20% of £9,888 1,977.60 Total Trustee’s Fee 4,477.60 EXPENSES: Accountant in Bankruptcy 480.00 Insurance 40.00 Registers of Scotland 50.00 Software licence fee 180.00 Total expenses 750.00 Funds available for creditors 4,660.40 % return for creditors 22% Debt write-off 78%
Note: if at any point during a PTD, you feel like you may struggle to pay your income contribution, you must contact us immediately. It may be possible to arrange a change in payment amount or a payment break due to extenuating circumstances, assuming these could be evidenced. If you breach your payment agreement without making contact with us, you could be refused your discharge from the PTD which would leave you in the same position as you were before signing the Trust Deed i.e. having to repay all remaining debts in full (plus interest and minus any repayments made via the Trust Deed to date) and dealing with all creditors. In some cases, you may be sequestrated, (made bankrupt), for failing to comply with the terms of the Trust Deed. It is also possible for the Trustee to go directly to your employer and have the income contribution deducted from your salary, this will only happen if two consecutive payments have been missed and you are not co-operating with the Trustee.
Debt Arrangement Scheme (DAS)
First of all, the fees for DAS are set out in legislation and are the same for all individuals whether they use an insolvency practitioner firm (e.g. Harper McDermott Ltd t/a Trust Deed Scotland) or a third/public sector organisation (e.g. StepChange Debt Charity, Citizens Advice Bureaux or a local authority Money Adviser). All providers of DAS must follow the DAS legislation, therefore, the fee structure and amount charged will be the same.
Part of our role is to calculate what you can afford to pay to your debt solution, this is done by reviewing your income and expenditure. What you have left over after allowing for all your household bills and living expenses is deemed to be an affordable amount to pay to your creditors. The fees in DAS are taken from this payment. Effectively, this means your payment is split between fees and creditors as set out in the DAS legislation.
The costs of administering the scheme are borne by the creditors and as stated above, are the same for all DAS providers i.e. from every £1 received into the scheme, 22p is used to pay these costs; for our cases, this 22p is split between the DAS Administrator (2p) and the Money Adviser (15p) and the Payment Distributor (5p). We act as both the Money Adviser and the Payment Distributor, therefore, receive both fees so 20p in total. The remaining amounts are distributed amongst all creditors on a pro rata basis and a successfully completed Debt Payment Plan (DPP) deems all debts to be repaid in full, other than the interest and charges that are frozen at the date of application.
The fees and expenses of your DPP will be explained in detail in your DAS paperwork. Based on our average DAS, the following is an example of the fees payable and payments to creditors:
- Monthly payment: £271
- Debt level: £20,857
- Payment term: 77 months
£ £ Total expected payments £271 * 76 20,596.00 £261 * 1 261.00 Total payments 20,857.00 Money Adviser 15% of £20,857 3,128.55 Payment Distributor 5% of £20,857 1,042.85 Accountant in Bankruptcy 2% of £20,857 417.14 Total fees 4,588.54 Funds available for creditors 16,268.46 % return for creditors
(deemed to be payment in full, therefore, no debt write-off)
Note: it is essential that you maintain your agreed monthly contributions into your DPP. If at any point during the term of your DPP you feel you can no longer afford the payments agreed, you must contact your Money Adviser or their staff to discuss. Contacting us to discuss any payment difficulties you are experiencing or changes in circumstances is essential, DPPs under DAS do provide an element of flexibility. You may be entitled to a payment break in certain circumstances (such as illness or redundancy) or your Money Adviser may be able to review and amend your payment to suit your changed circumstances – this is subject to creditor approval. If you fail to keep up with your agreed payments and fail to contact your Money Adviser to discuss, your DPP may be revoked, leaving you liable for payment of your debts at their original contractual payment level (including interest and less any payments made to date).
Trust Deed Example
Example Unsecured Debts
|Credit card 1
Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here