Could it be a way of generating more income? A lower payment over 5 years could give more money to the creditors and genrate more fees for the IP with not a lot more work being involved. Apologies if that sounds a bit cynical. Could also leave more time for PPI investigations. My concern would be that a 5 year trust deed could stretch to 7 if there was a portion of equity to be realised.

I wonder if the insolvency practitioner regulatory bodies should have a role to play in this area?

IPs are required to ensure that all options (like bankruptcy for example) have been explained to a client before they proceed with a trust deed.

If a certain firm charges a level of fees well in excess of the average, should they be required to explain to their client that they might be able to enter a protected trust deed with another firm that would run for a much shorter term?

From a client point of view that information seems to be just as important as knowing which other types of debt solutions are available.

shop around,it really is as simple as that.

Not all insolvency firms are the same,and avoid middlemen like the plague as they dont give a hoot about you after things are signed.

Paul

Hi all

Trust Deed certainly seemed to be the obvious option as sequestration was a no no and DAS would have been greater than 10 years.

I think it can only be a feeing issue as there is nothing to indicate a valid reason for the extended period ie there was no property/equity, creditors were all standard.

Mark

An interesting point, trust deed assistant, but is it really fair to expect insolvency practitioners to do this? It's like saying that all lawyers should advise prospective clients that other firms will do the same work cheaper, or Waitrose advising their customers that they can go down the road to Aldis for their fruit and veg instead and pick it up more cheaply.

The problem is that you are not necessarily comparing like for like - good service and quality is sometimes worth paying a little more for.

Unfortunately there is the danger that some firms may charge higher than average fees yet provide worse than average service. I think regulation certainly plays a part in making sure that minimum standards are upheld, that fees are completely transparent and the reason for any extension to the normal three-year period fully explained. Then it is up to forums (fora?) like this one to fill the gap and allow people the chance to share their experiences to show up the poorer yet more expensive firms for what they are. Hopefully most people are savvy enough to do their homework or get a second opinion before signing anything.

Hi Kevin

I think the fact that they queried this, as most people do is a positive thing.

It's unfortunate that people are in a vulnerable position and looking for some relief from creditors, phone calls etc and are preyed on to sign documents without fully understanding the consequences. Fortunately, with the exception of 2 or 3 specific firms, this does seem to be fairly rare.

Mark

I think there should be a mandatory cooling off period after a consultation. This will give the potential client a chance to look at all the options and do more research. When you are at the point of going to one of these firms, you just want someone to take all the worry and stress away. That's why people will agree to extended periods of time, it gives them a finish date. The client may not be functioning at their most reasonable so it's up to the IP to behave ethically. Given the statements by the experts, that's a practice they embrace. Other firms, not so much. I can remember saying to my middle man that I couldn't cope anymore and that I just wanted it over. I had an appointment the next day and signed everything. I did no research- literally went with the best advert in the yellow pages.

Hi gillian

The guidance is quite clear on this. However, they fall short of stating a time period between meeting and signing. It states that the practitioner should be satisfied that a debtor has had adequate time to think about the consequences and alternatives before signing a trust deed.

They also state that a full file note of the initial meeting or telephone interview should be prepared and retained on the case file AND copied to the debtor. I think the danger with telephone interviews and then posting the documents is that a person receives fairly technical paperwork and there's bundles of it and asked to sign and return.

Mark

Hi Kevin.

In other respects the term of a debt solution is a vital part of the decision-making equation.

For example someone may have a choice between:

1 - A debt management plan that might last for 10 years, but which could be longer if interest isn't frozen.

2 - A DAS that will last for 10 years assuming the payments are made as expected.

3 - A trust deed that will last for three years, unless other circumstances dictate that it needs to be extended.

4 - Sequestration from which you'll be discharged after a year, and may have to make contributions for three years if affordable.

The varying expected terms (and the difference in the certainty of the terms) will be major parts of the decision making process for many potential clients. So presumably any IP firm would be expected to provide this information to their client.

I don't see any issue with firms charging differing fee levels. As in every other business this will happen. Perhaps this changes where the term of the solution, part of the information you need to make an educated decision, is extended by higher than average fees?

In the spirit of giving a client all of the information that they need to make an educated decision, wouldn't it be right that they can make a fully educated decision where one firm might suggest a five year trust deed but another would be entirely happy to run it over three years due to lower fees? Isn't that in effect two different debt solutions? A 36 month trust deed versus a 60 month trust deed?

I totally agree that good service might be worth paying for. Surely that should be a decision for a client though. To make that decision a client would need the comparison information to be provided to them so that they can make a choice?

I need to caveat this a little. There are circumstances where a trust deed will need to run for more than 36 months for it to be acceptable to creditors irrespective of fees.

Although the results of rushed debt solutions are potentially harsher, more damaging and long term, we are always at most risk when we're desperate. Emergency car repair, emergency dentist, emergency surgery. All arguably avoidable with regular review and maintenance but clear thinking and comparison shopping go out the window when it's urgent.

I don't disagree actually - am playing devil's advocate to some degree. People under debt stress are vulnerable and need protection, no question.

IPs cannot be checking what each other's fees are and communicating that to prospective clients, though. It is just not practical, especially as fees can vary a lot depending on the complexity of the case. However, the IP can surely be expected to say to the client that it is possible that another firm could be cheaper and that this may mean that the trust deed would not have to run for such a long term.

In reality though, I think you will find that these firms that are charging above the odds will still manage to couch this in such a way as to make sure that they don't lose the business. Or perhaps I'm just a cynic!

[Disclaimer] The following is not intended to be a nationalistic statement!

There appear to be a number of England-based companies offering trust deeds - whether as middlemen or as trustees.

IVAs typically last five years.

Is the 'five-year trust deed' simply a result of England-based companies treating trust deeds as if they were IVAs?

I knnow that won't be the case for all, but I wonder if it explains part of the phenomenon.

Not really candlewick,its simply a case of some TD providers chancing their arms and signing people up for longer than is necessary.

Paul

Hi candlewick.

That doesn't apply to the firm that I particularly have in mind!