When you’re desperate for help with an unmanageable debt, you may be vulnerable and you can try almost anything to deal with the problem. Whatever you do, avoid agreeing to any up-front Trust Deed set up fees.
There are many very good ethical debt advice companies who do not charge up-front fees and will initially give you advice without charge.
They will let you know when they want to do work that they can charge for and they will agree any charges with you before they do the work, so that you only commit to what you can afford.
You should not be paying to set up your Trust Deed in any way. To help you spot some of the up-front fees we have seen charged, here are some of the tactics some companies will use to try and extract money from you while you investigate the options available to you.
1. Charging You A ‘Booking Fee‘
You ring up to get some advice and book a meeting with a Insolvency Practitioner, only to be told you have to pay a booking fee in advance. Don’t be fooled. Refuse to pay for what should be free advice and find another company instead.
2. Telling You Fees Are ‘Standard Practice’
The Debt advice company may tell you up front there is a fee for their service and that it is quite normal to have to pay a fee beforehand. This is untrue. You are in debt and you should not have to go further in debt by paying set up fees for something you can obtain for free from other ethical companies.
3. Hiding The Set Up Fees In The Small Print
You may not be told about any set up fees until an application pack arrives and hidden in the small print is a clause referring to the first few payments being diverted to the Debt company as fees. This means payments towards your Trust Deed will be delayed for two to three months while the company takes an advance fee from your payments.
4. Selling You A ‘Debt Management Plan’ first
Don’t be persuaded to embark on a debt management plan (DMP) for six months which will lead you into a Trust Deed, even if the company does claim that its DMP could help you in the long run.
What the DMP will do is allow the company to take a couple of ‘fee payments’ from you upfront and then charge a percentage of your contribution every month for the duration of the DMP, before converting you to a Trust Deed later on.
If you don’t qualify then there are other options and you may even be able to enter a Debt Arrangement Scheme (DAS) which is another legislated solution which is covered by the Scottish Government.
5. Paying For A Survey
Part of the process for applying for a Trust Deed is having a survey done on any property you own to check how much equity is available for release. This should not cost you anything, but some companies will still try it on and charge you equity survey fees.
6. “Double Glazing” Trust Deeds
It’s becoming more prevalent for debt management companies to send high-pressure salesman to your home to sell you a Trust Deed laden with fees and charges. Like double glazing salesman, these people don’t like to leave your house until they’ve got you to sign on the dotted line – which usually leaves you considerably poorer and no closer to getting rid of your debts.
Obviously there are ongoing fees involved with any type of formal payment plan, but these come later and do not affect the timescales it will take to get you out of debt. A small amount of your monthly payment to creditors is taken by your Trustee (Insolvency Practitioner) to cover the time and costs of administration of your Trust Deed and ongoing monthly management.
This is perfectly normal and has been agreed by your creditors beforehand. What is not normal is companies trying to get extra cash from you before the arrangement is set up when you have very little income and are coping with an awful lot of stress and worry.
Be wise to their tactics and don’t let them get away with it! For more advice on Trust Deeds give us a call free on 0800 193 1024 or see if you qualify with our Free Online Calculator.
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