If I've only been in trust deed for a year do I just pay one years interest?

Hi David my payment is £300 per month, I dont have any assets. Is it possible for a 3rd party (family) to pay off my trust deed?

Hi Hf1998,

Have you actually spoken to your Trustee about your concerns?

Yes, if you have been in it 1 year then you would pay 8% interest on the debt.

A family member could pay off the Trust Deed for you.

To give you an example (and I stress just an example) of what you could be required to pay it could be £23,000 + £1,840 interest and then between your Trustee fees which could range between 3-5k (you will need to check with your Trustee about their exact fee structure).

In total you could be looking at an approx. balance to exit the Trust Deed early of £27k to £30k.

If you maintained your payments of £300 per month then you would repay £14,400.

When I signed trust deed I never read the paperwork I just went ahead & signed it, at the meeting I was informed fees woukd be £2500 but looking at fees on paperwork they certainly are higher! How can this be allowed?

Hi Hf1998,

Generally Trustees will charge a fixed fee and also a % of realisations that they ingather into a Trust Deed.

When it comes to the Trustees fees these are paid for from the creditors funds unless there is a scenario whereby a client can repay their total debts plus interest. Then on top of that the client can directly pay the fees of the Trustee.

At the outset of the Trust Deed their fees should have been explained to you. When a proposal is sent to the creditors it confirms the exact fee which the Trustee will charge. Creditors if they find this fee excessive can object to this if they wish. Normally there isn’t a problem with a Trustee fee but in the situation like I say whereby a client is repaying the full debts then it can be an issue.

I would communicate with your Trustee about your concerns.

Could you foresee at the time you signed the Trust Deed a change in your circumstances that meant you would feel this way? I’m just trying to establish what has changed that has made you feel like this about the Trust Deed

That was definitely not explained to me about the fees I thought it was a flat fee & the word 'realisation' hasnt ever been mentioned to me at the meeting. All I was told was the creditors would pay the fee i assumed it was £2500. The change in my circumstances happened just over a month after signing the trust deed, over past couple months I've been reading information about TD as I didn't really understand what it entailed, as mentioned before I now have the chance to deal with debt but I'm tied into this. Next year I also have the opportunity for a promotion at work I honestly dont see point in promotion if I'm still tied into the td.

It's true that the fees generally come at the expense of the creditors Hf1998 because it's often money they have to write off at the end of a trust deed.

We'd still say that it's you, the client, paying the fees though. The fees are being paid to a trustee you appointed from money that you're paying in.

When circumstances improve and no debt is being written off at the end of a trust deed the burden of these fees will fall upon the client.

I guess promotion might help if it meant you could pay more and finish your trust deed sooner? You'd obviously have more money after being discharged as well.

should people signing up to trust deeds not be told this information at meeting? If I got a promotion would all extra wages would go to trust deed?

Hi Hf1998,

When it comes to looking at a clients available options a good advisor should explore all of the options such as a Trust Deed, Debt Arrangement Scheme or even Sequestration. Following a meeting with a client we summarise everything in writing including all of their available options.

Did anyone discuss a DAS with you or alternatives to a Trust Deed?

If you receive a promotion at work then a review of your budget should take place to see if you are in a position to pay an increased payment or not. It's not guaranteed that just because you earn more you can pay more as you could have additional bills.

If you were not subject to a Trust Deed and managing your debts yourself there is an argument that you would maybe pay more towards your debts if you earned more so it's about a balance.

I would try not to look back at negatives but look foward and focus on making your monthly payments and in 4 years time you will be debt free. If you pay £300 for 4 years you will repay £14,400 and have £8,600 written off potentially.

Hi David thanks for reply. The advisor never discussed any other options with me was only trust deed and bankruptcy, I never received a written summary of what we discussed, in saying that I remember signing stuff but not what was on it! If I got the promotion I do believe my payments will go up and think I'd end up paying the full debts back so none of the debt would be written off.