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19/09/2017 10:15 am
There are some interesting, and frankly disturbing, figures in connection with Protected Trust Deeds contained in the Accountant in Bankruptcy's annual report released last week.
Some forum members may remember there was some consternation last year at this time when worrying figures were reported by AIB that a small number of insolvency firms had failed a huge percentage of the Protected Trust Deeds (PTDs) they closed in 2015-16. During that period, one firm’s failure rate stood at 88 percent.
New figures for 2016-17 unfortunately show the same story again for a couple of large firms, once again failing a huge percentage of the Protected Trust Deeds they closed. the worst failure rate for this period was 74%.
If this was commonplace across insolvency firms then it would be a very concerning phenomenon indeed. After all, a failed Trust Deed means that the individual who has signed up is not being discharged from their debts. It is quite possible that many of these people will have made significant payments into their Trust Deeds, the bulk of which may merely have been swallowed up by the trustee's costs and outlays involved in setting up and administering the failed procedure.
Thankfully, the figures show this is not the norm. The industry average for both years is approximately 15%, though this itself is skewed by those few firms who are failing such a high proportion of their cases and the majority of firms percentage failure rates are actually in single figures.
So why this huge discrepancy between most firms and one or two that seem to be performing so badly? I had wondered last year whether this was merely a statistical anomaly of some sort and would right itself the next year. However, the fact that this situation has now been replicated two years in a row would suggest not.
I don't know the reasons why this keeps happening. What I do know is that if I was thinking about signing up to a Protected Trust Deed I would be staying well clear of any firm where the majority of the Trust Deeds is sets up end up failing.
Unfortunately, although the PTD failure rate figures are publicly available, people of course are not aware, are unlikely to happen upon the AiB’s report and are even less likely to trawl through the figures and try to make sense of them amongst all of the jargon.
It is worth remembering that where a firm appears in your Google search reflects their marketing spend and website development skills, but not necessarily their ability to successfully sort out your debt problem. Unfortunately, as these official figures show, choosing the wrong insolvency firm can have a huge impact on the chances of successfully getting to the end of a Protected Trust Deed.
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19/09/2017 10:28 am
Page 100 on the following PDF document if anyone wants to see the data:
(Expired link removed by admin).
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds 
20/09/2017 4:30 pm
Wow just had a look at this and the company my TD is with has a very high percent on failed PTD. Should I be worried ? What is the reasons for a PTD to fail ?
20/09/2017 5:07 pm
Hi Jroger.
Possible reasons for failure might include the payments becoming unaffordable for some reason, or being set up from the start at an unaffordably high level.
It could also include customers entering into trust deeds without having sufficient commitment to seeing the process through, not least in respect of living to a restricted budget. This could come down to people making their own choice between competing priorities, or it could come down to people entering into trust deeds without being made sufficiently aware in advance of the consequences of their decision.
Other reasons for failure might include customers failing to comply with reasonable requests from their trustee, perhaps for example by not engaging sufficiently with reviews of their trust deed.
I'm not suggesting that these are the factors in play in respect of the firms in the report that have very high failure rates. I don't know for sure why they do.
We have seen people within the industry asking questions of the representatives of insolvency regulators on LinkedIn about how such enormous differentials in customer outcomes could exist and/or continue. The answers we've seen in reply have been somewhat vague in our view, and refer to the possibility of unique factors perhaps being in play in some instances. However, to be fair, it is possible to envisage certain types of unique factors that could make a difference here, in the short-term in particular.
Bringing these statistics into public view will, I'm sure, bring this subject into much sharper focus both at firms and also at their regulators.
I wouldn't be too concerned about your own trust deed necessarily. If your payments are affordable, you continue to stick to your commitment, and you comply with reasonable requests from your trustee, I'm sure you'll be absolutely fine.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
21/09/2017 1:52 pm
Hi TDA,
Yeah I just think it's scary why 2 companies are over 50% failed PTD and I'm with one. The worse of it I didn't choose this company and at the time dealt with someone else who never mentioned they pass my information on. Looking back I would have challenged this this cause the company has been a nightmare. Took the 6 months to get me protected after losing my paperwork and could never get hold of them, even one day I phoned over 20 times and finally got someone but was hopeless. I was paid off and had to ask for a break but every month I would receive 10-15 calls from them about payment and having to explain the same story over and over, and even asked me if I can't afford to make payment from my £137 benefit that I revived every 2 weeks. I started making payments again after telling them I'm earning 600 less per month, but no interest and took 6 months to send a new I&E form but still no luck with anything with my wages being less. With seeing these figures really set alarms of and it looks and feels they want to take as much as they can for thief fees and at the first chance they will cancel your TD for any reason. I was in a car accident and asked for a break to pay the £250 excess, I set proof from insurance but was told no and I mast make payment and if I don't they will need to look into my TD. Companies like this shouldn't be no were near dealing with trust deeds.
21/09/2017 2:56 pm
Thanks for sharing this information Kevin, I’m sure it will be useful for people who are considering entering into a plan with a firm to deal with their debts and it really does bring things into the open. The figures are useful and it provides a good insight into different firms and their performance in relation to the fees that are charged, the dividends returned to creditors and also the number of Trust Deed’s whereby an individual doesn’t receive their discharge from the debts.
I’ve always believed the key to a successful Trust Deed is the balance between a payment which the creditors are prepared to accept and also a payment which the client is happy to pay and I believe they can sustain. I also think that wherever possible it’s a good idea try to do a face to face consultation with a client. This really allows an advisor to access their full financial circumstances and also gauge if we think they can sustain a payment or not. Looking at the two companies with the highest failure rates my understanding is that these are both based down in England and therefore I assume are not in a position to offer face to face consultations with clients. On the forum we always recommend wherever possible actually meet the qualified advisor who will handle your case from start to finish. It’s all too easy to simply sign up to something over the phone when someone offers you a solution to your debts.
Failure rates can be down to a variety of reasons such as a change of jobs, a reduction in income or non-cooperation from a client Jroger. The key under these circumstances is to work with a client as much as possible to resolve the issues and find a way of making the Trust Deed work for all parties involved. It does sound like you haven’t had the best experience with your Trust Deed Jroger when it comes to customer service and feedback. Like TDA has advised if you successfully complete your agreed payments then you will receive your discharge at the end of the process. Stick at it and I’m sure it will work out.
As you say Kevin, clever marketing and large spending on website development and advertising doesn’t necessarily mean that a client will find their way to an organisation that will successfully resolve that clients debt problems in an effective way.
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03/10/2017 11:12 pm
I'm a bit concerned reading this as the company I'm with is one of the highest failure rate what does this mean and how do they fail I have received my form 5
04/10/2017 8:29 am
Hi Iainvr4. IN the event that you have already received your Form 5 then your Trust Deed would not fail as you have already met your requirements and have been discharged accordingly.
04/10/2017 8:31 am
Hi iainvr4.
If you've received your formal discharge (Form 5 recorded on the Register of Insolvencies) after successfully completing your trust deed then I can't see that you have anything to worry about here.
Qualified Debt Adviser & Forum Administrator - Ask me anything about Trust Deeds
