What’s the difference between a debt company and a debt charity? Often, the answer is very little. So before you commit to a Scottish Trust Deed using a debt charity, read this…
If there’s one thing that’s essential when you’re trying to address debt, it’s transparency. Putting all the cards on the table, so you can see exactly what you’re dealing with and how much you can afford to pay back, are central to a debt plan that works.
The same is true for the people who help manage that debt.
Scottish Trust Deed is a debt management company for people in Scotland. We help people like you get free of £5,000+ of debt by coming to an arrangement, such as a Scottish Trust Deed or Debt Arrangement Scheme, to pay off a proportion of your debt over a period of time, usually a minimum of four years. Out of the amount you pay, your creditors will receive some of the money and so will we, because if we didn’t charge we couldn’t do the job. Just to be clear though, we do not charge setup fees and you should never be paying these.
Do Debt Charities Work For Free?
Perhaps there’s nothing in that opening section that surprises you. On the other hand, you might wonder why you should pay us anything when you could go to a debt charity and get the same service for free.
Except that, it isn’t free.
I should stress at this point that this isn’t a piece talking down the work of debt charities. Whether at the charitable or professional end of the debt support spectrum, we’re all doing a valuable job helping people out of what is often years of stress and worry in managing their debts.
But it is important to be clear about the facts – and the fact is that debt charities don’t work for free. Either they charge for their service. Or, if they’re not licensed to act as an insolvency practitioner, they hand your case over to someone who is and the insolvency practitioner charges for the service instead. Either way, whoever you choose and whatever their status, part of your settlement will pay the people helping you to manage your debt.
- StepChange: Charge Fees? – YES – Easy to navigate to fees information page on site? – NO
- National Debt Line: Charge Fees? – YES – Easy to navigate to fees information page on site? – NO
- Citizens Advice Bureau: Charge Fees? – YES – Easy to navigate to fees information page on site? – NO
- Debt Support Trust: Charge Fees? – YES – Easy to navigate to fees information page on site? – NO
- Debt Advice Foundation: Charge Fees? – YES – Easy to navigate to fees information page on site? – NO
- ScottishTrustDeed.co.uk: Charge Fees? – YES – Easy to navigate to fees information page on site? – YES
- The Money Advice Service: Do not provide debt solutions directly but provide helpful advice
- Citizens Advice Bureau: Do not provide debt solutions directly but provide helpful advice
When we refer your case to our insolvency practitioner, we’ll receive a fee from them for our efforts. Unless they are licensed insolvency practitioners, most debt charities will do exactly the same.
There’s nothing wrong or underhand about that – it’s standard practice within the sector and doesn’t affect your monthly payment. But it’s wrong to assume that we charge fees when charities don’t. Everyone’s paying (roughly) the same amounts because fees are governed by the legislation affecting Scottish Trust Deeds.
Paying Down The Debt
How does that affect you? In practice, it won’t affect you at all. When you set up your Scottish Trust Deed, the amount you pay each month and the number of months you pay it for are agreed in advance. The fee for setting up your trust deed is included in that amount.
In theory, then, it wouldn’t usually matter to you whether the payment for your Scottish Trust Deed management was 2%, 5% or 10% of your monthly amount. You’d still pay the same amount and, at the end of the period, the outstanding debt will be written off.
In practice, fees typically fall within a fairly tightly defined bracket so no one provider is hugely cheaper or more expensive than the next. The crucial thing to note is that, whoever you choose to manage your Scottish Trust Deed for you, you’re still paying for the service.
The Deciding Factor
So if everyone’s charging a fee, everyone’s charging roughly similar fees, and if those fees don’t actually affect the amount you pay back each month, how on earth do you decide which debt advice service to use?
We believe it comes down to trust, track record, and a company/charity’s ability to give you the advice you need and secure the right debt management service that works for you.
That means doing your research. We, for example, have a 9.4/10 score on TrustPilot from 112 reviews (as of November 2019) (at time of writing).
So, next time you’re choosing your source of debt support, remember these key points
- Everyone charges (including charities)
- Everyone charges (roughly) the same
- None of the charges affect the amount you pay
There’s nothing wrong with debt management charities. But let’s not pretend they operate any differently to anyone else.
If you need help with your debt, talk to us about whether a Scottish Trust Deed could be the right answer for you. We specialise only in Scottish debt solutions and we have been helping people for over 10 years get back on their feet with their finances.
Trust Deed Example
Example Unsecured Debts
|2||Credit card 1||£6,812|
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