Welcome to the forum CelticTiger.

Well... £10 per month for clothing for a family of five clearly makes no sense in terms of a workable budget. It does seem like quite significant sums have been allowed for other expenses though.

Most consumer credit lenders will have clear criteria about what they will, and what they will not, accept in respect of a trust deed proposal.

Trustees are made aware of these criteria and have little financial interest in proposing cases that don't meet them and will not become protected.

One thing I'd pick up from this proposal, with £6,000 of debt and a £110 monthly payment, is that DAS would potentially run for just a few more months than a four year trust deed. If the payment were a little higher each month it could clear the debts quicker than a trust deed.

DAS would generally be seen as a less damaging option provided that it can be completed within a reasonable period. It would also ensure that the creditors get much more of their money back.

Thanks for replying.

Am I picking up right that these sort of numbers are "not ridiculous"? i.e. it is believable that the enough creditors may accept 10p in the pound for a TD?

The vast majority of the 6k is to 3 payday lenders, and a credit card company, though address is listed as "c/o TDX Group, The Insolvency Exchange".

"Trustees ... have little financial interest in proposing cases that don't meet them and will not become protected"

The trustee has clear financial interest if my family member decides to set up a TD with his/her firm. In fact I dont see what the trustee has to lose here, it's risk free for the trustee. if the creditors decline the proposal, what has the Trustee lost? Sorry for making challenging comment, but in the proposal as outlined by this provider the main beneficiary seems (at first glance) to be precisely the Trustee.

Of the 110 per month over 4 years, i.e. 5280, the trustee is taking ca 45% in straight fees

Trustees Fixed Administration Fee (1,830)
Permanent Trustees Fee (1,056)

and 40%+ is used on sundry other costs, e.g.

Accountant in Bankruptcy Supervisor Fee (500)
Stationery & Postage (200)
Storage Costs (300)
... (12 other line items)

Also, in this case "6k of debt" is incomplete. With HP arrangements for car, and also I've now discovered more HP for white goods, there is 12k of additional "overall debt". The paperwork sort of pretends that doesn't exist. (meaning the plan assumes she will continue to pay the car and white good HP, so the debt for ongoing car payments is covered in full, but the CC debt is paid at 10p in the pound)".

I've also searched and the company involved is not listed on FCA web site, in fact their Permissions are inactive (lapsed) since end-2014 for

Debt collecting
Debt-Adjusting on a Commercial Basis
Debt-Counselling on a Commercial Basis

For now I've advised my family member not to sign any paperwork.

Hi again.

Yes - it's not at all uncommon for creditors to accept 10p in the pound. This may be because the individual is clearly insolvent and they'd receive less if they went bankrupt instead.

The trustee has a financial interest in setting up a trust deed. If it fails to become protected though they'll likely not be able to recover their time costs invested in the case up until that point. Trust deeds failing to become protected aren't a good outcome for the trustee.

If the other credit agreements are for Hire Purchase, and the goods/car remain needed, payment in full will usually continue to be made. This is because the goods/car would otherwise be taken back by the finance provider.

Insolvency practitioners don't have to be regulated by the FCA. This is because insolvency work falls outside of the scope of FCA regulation. Some insolvency practitioners choose to be regulated by the FCA though. This is because the provision of debt advice (rather than narrow insolvency services) is subject to FCA regulation.

Was your family member even advised about DAS as a possibility do you know? It would certainly seem a more suitable option in my opinion given that it should only take around 6 months longer than a Trust Deed.

Do you know when the HP payments are due to end? It may make a big difference as if this is during the period of the Trust Deed then your relative's trust Deed payments may increase accordingly at that point - she has an obligation to pay as much as she can afford throughout the 4-year term. She could easily end up paying more through a trust Deed than in a DAS payment programme if this is the case.

Hi CelticTiger,

I think you are right to look into things more and it’s probably a good idea for your family member to seek a second opinion in relation to their debts and financial situation.

TDA has covered all of the points you have raised and I agree with Kevin that a DAS would appear to be a more suitable plan that offers more flexibility than a Trust Deed.

In relation to a DAS, if this was the more suitable option then for debts of £6,000 if they paid £125 per month and used a non-fee charging organisation to set this up they would be debt free in 48 months.

Thanks for all answers.

The car HP/debt has 46 months (was 60 at start) left to run. I dont know on the white goods, a guess would be at least 18 months (imagining interest rates are not low). 35 pounds per week for 4 white goods appliances, with around 2k outstanding.

My understanding is that the provider she spoke with only offers Trust Deeds, their web site confirms this, so DAS was not discussed or proposed. This is why I noted point on FCA, as my understanding is that an FCA authorised debt advisory firm can go over all options (and probably has a duty consider all options).

I must admit it is really difficult for someone of my generation to get past a professional advisor suggesting a budget of 160 pound per month for mobile phones, 100 pounds per months for TV and internet services, and 10 pounds per months for clothes for a family of 5, incl 3 kids under 10, in a legally critical document. Then trying to charge 4k+ for this "service". if this is typical of the TD market, and that provider has generally good reviews on TrustPilot and is also mentioned positively on these forums, then we are living in a truly crazy world.

I can see where you're coming from CelticTiger.

The trust deed firms who feature on this site are fully authorised to deliver full debt advice and to set-up DAS for customers. Our internal debt advice team is also FCA authorised.

Your family member may wish to consider getting a second opinion from a firm that advises about, and provides, a full range of options.

From what's been written here, it seems quite likely that DAS should also be seriously considered.