194

Just one more thing I would like to add.

Legislative changes in 2013 allow a trustee acting under a protected trust deed to charge a fixed fee plus a % of realisation.

As an unintended consequence on this change, eyebrows have been raised were the trustee has taken the % fee from assets that weren’t foreseen at the outset of the trust deed such as inheritance.

In your case, if the percentage fee is 20% then your trustee would be able to charge a fee of £15k. If your debt level was much lower, usually the % fee is restricted to full case recovery. For example, if your debt level was £10k then the trustee percentage fee would be restricted on the sums required to pay your debt off in full (i.e 20% of £10k).

As creditors agreed your trust deed with full disclosure of the fee, the trustee is entitled to charge the £15k however there is an argument that the fee charged in materialistically disproportionate to the work carried out by trustee. This becomes more of a moral argument opposed to a legal one.

Any trustee is still required to maintain time records of their work and in practice, the trustee would restrict their fee to a more sensible amount.

Given your debt level, it would be unlikely there would be a reversion of funds back to yourself however, if you are unhappy with the fee then you can always ask the Accountant in Bankruptcy to conduct an audit of the trustee’s accounts.

Prior to this, you should speak with your trustee and work out whether a negotiation on fee is possible.

Hope this helps.

P

Thanks for the feedback.

Just waiting for confirmation from the Trustee on how the 21k has been calculated.

Thanks.

Hi

Still waiting for the confirmation but I've reviewed the estimated cost breakdown and they seem to have applied the 20% to the 'creditor claims and costs' and their fee (their fee includes the 20% calculation which comes to £21k). The Creditor Claims & Costs is £80k so the 20% seems to have been applied to the total which includes their 20%. Had the 20% been applied to the creditor claim and cost it would be reduced from £21k to £16k.

Would this seem normal practice?

Thanks.

Hi 194.

I'd expect that the realisation fee would be a percentage of the full amount collected in.

Still, it does seem reasonable for you to ask them to reduce this fee in these circumstances. Whether they'll agree is obviously a matter for them.

It is a bit of a mathematical anomaly, ie they are allowed to charge 20% of the total amount they gather in but then that total in itself is being inflated as a result of them adding the 20%. To my mind it is double-counting and unfair, though is probably legally fine for them to do if they insist.

I think if you make an issue of this then there is a reasonable chance they will back down and reduce their fee.

Hi Kevin

Thanks for the feedback on this one. I've asked this question to the Trustee as well as enquiring about any options around retaining the inherited property. Just waiting for a response.

I didn't have any understanding of what the figure would be to close the Trust Deed but given my debt 3 years ago was £62k, the estimate of £110k ( including £10k already paid) seemed high. However, I appreciate I might not have much say in this one.

Thanks again, really appreciate all the support on the Forum which I've found invaluable.

It is possible to request that the AIB have a look at how the trust deed is being administered and they can issue a determination to the Trustee accordingly if they disagree with how their fees are being calculated.

I'm not sure that there would be much chance of success on the general point that the fee is more than that required to cover the Trustee's work, given that the percentage of realisations fee is agreed at the start of the Trust Deed. However on the specific point regarding the Trustee charging a further 20% of the amount required to meet their 20% fee, I definitely think it is worth asking the question as it'd be worth £5000 to you if they agree that it is unfair.

Would be interested to hear how this pans out for you, 194.

Morning All

Hope you don't mind me checking in again on this one.

Currently following up on the Fee Realisation calculation with the Trustee. In the meantime, can I just clarify the position on interest charges in relation to the cost breakdown I've been supplied from the Trustee please?

An interest charge of 8% per annum (applied to each of the 3 years) has been applied to my original debt. Is this a standard approach?

Many thanks.

That does sound like a standard approach 194.

8% "simple interest" (rather than compound interest - where interest would also get added to interest) per year.

Thanks for the quick response once again.

Would there be an understanding that this would be referenced within the Trust Deed Agreement? I've been advised it's based on the Bankruptcy Scotland Act.

I don't know the technical answer to that 194. Hopefully someone else can confirm this for you.

I do know that this is the common approach taken and I'd assume that it's consistent with bankruptcy process (a lot of things are).

Morning 194

Statutory interest is referenced in S129(10) of the Bankruptcy Scotland Act 2016.

The Trust Deed will have a standard sentence regarding the bankruptcy act to deal with these sort of issues.

S129 (10) states that the trustee should pay whatever is greater - statutory interest at 8% or the rate of interest by the creditor changed before sequestration.

However, it practice it is usually always 8%

Thanks so much Paul - that helps so much.

Greatly appreciated once again.

Hi All

Thanks once again to all for their previous support and guidance, greatly appreciated.

I've been advised that as there was some objections from my creditors at the time of entering the Trust Deed, the Trustee is now applying a 15% fee rate. As such this takes my balancing figure down to £89k. The 15% figure is calculated on a total which includes the 15% fee. This is clearly better for me than the previous calculation which was based on 20%. I did query if the fee % could not be calculated on a total which doesn't already include the fee but advised that is the application of the law. They did advise that if I wanted to challenge this I could contact AIB who would charge around £300 and there would be an increase to the Fee I would need to pay my Trustee. Given this I'm not really sure there would be a benefit in pursuing? It is almost immaterial but there is a £500 charge for a contingency but is this relevant if I'm settling the full amount?

In addition, I'm not going to be able to raise a mortgage on dad's property so will have to sell. I'm hoping to clean up the house and put it on the market in the New Year. Once sold, I can then repay the Trustee. Would that seem a reasonable approach to propose to the Trustee? If it sells in the next 6 months, will my interest charges and fees increase? I will naturally keep making my monthly payments but keen to draw a line under the interest/fee charges which have already been communicated.

Sorry for all the questions but I've found it quite challenging dealing with the Trustee. I've asked a few questions and generally taking 2/3 weeks for answers and often there are errors in the responses. However, I do appreciate the Trustee is representing the Creditors so their focus is elsewhere.

Many thanks again.

I'm glad to hear that the total fee is to be reduced 194.

I'm sure your trustee will want to work with you in a reasonable way to facilitate the sale of the property. You'll need to discuss the detail of this with your trustee directly.

Regarding an audit of the fees, this is only probably worthwhile if you have reason to believe that you are being treated unfairly.

I would assume that further interest will continue to be added to the debts over the course of time, so moving towards a relatively quick sale of the property may be in your best interests.