Hi again nastynick.

You cannot set up a trust deed. You have to be a licenced insolvency practitioner to do so.

The firms represented on this site by Kevin, Shona and Mark have told us that their fees are typically £2500 to £4500 plus the cost of outlays connected to the case.

Money paid into a trust deed in excess of the fees/outlays would be returned to your creditors.

You can set up an informal debt management plan yourself. You'll have no legal protection and no guarantee that interest will stop. Creditors that agree can later change their mind. You'll need to issue payments to every creditor every month and go through your circumstances with them again and again in the future. They may pass or sell your debts to debt collection companies. You'll have to pay back the full amount of the debts plus any interest or charges that are added.

Other alternatives to a trust deed include sequestration or the debt arrangement scheme. Both require the involvement of others.

The debt arrangement scheme can be done for free. However, you'll again need to repay the full amount that you owe. Depending upon how much you can pay each month that could take quite a while.

I hope this information is useful and please let us know if you have any more questions.

Many thanks. I'm curious about the £2500 to £4500 which seems to be in excess of outlays.

What do I actually get in return for that?

I think you get to avoid all of the above, an independent 3rd party contacts everyone you cannot repay, states what is on offer and invites their agreement. Once achieved, seemingly almost 100% of the time, you don't have to remember a multitude of individual payments or worry about the actual debt increasing or keep up with the train of organisations who can end up thinking they have a purpose in hounding you, sometimes 5 or more companies following one account. Yoiu also get peace of mind, a settled position and certainty that it's over when it's over, not expensive really?

OK and thanks. Next question. A bankruptcy only lasts a year, and Trust Deeds are supposed to last for three but I've been told that depending on circumstances it could be four or even FIVE. That seems an AGE to wait for peace of mind.

Hi nastynick.

Outlays are things a trust deed firm needs to pay out cash for. They include things like advertising a trust deed, or valuing a house as part of a trust deed.
The fees are charged for the actual work that they do.
If the creditors don't like the proposed fees they can object to the trust deed becoming protected. If you read around the forum you'll see that thankfully this doesn't happen too often (and the big creditor organisations proactively tell trust deed firms what they will and will not accept in terms of fees).
It is you paying the fees, but they are drawn from the funds that you have agreed you can affordably pay into a trust deed.

From our fees page, here are some of the tasks involved in running a trust deed for which fees are charged:

The Trustee will charge a fee for setting up and administering your trust deed. This work includes (but is not restricted to): an initial meeting with a client or clients, post-meeting review and confirmation of options, preparation of trust deed document for signing, signing meeting, data input of details, advertising the trust deed, circularisation of correspondence to creditors, continuing correspondence with creditors and client as required, receiving and adjudicating creditor claims, review and realisation of assets where required, current status updates, statutory reporting to creditors and the Accountant in Bankruptcy, pursuing claims as required, preparing and distributing dividend payments to creditors, obtaining both the client's and the Trustee's discharge from the Trust Deed.

You will normally be discharged from bankruptcy after a year. That means you are no longer subject to the restrictions imposed by bankruptcy. However, if you are in a position to contribute towards your debts that will run for three years (the same as the usual term of a protected trust deed).

Most people don't enter four or five year trust deeds. There are circumstances where people are offered a trust deed on this basis. This will usually be to ensure that creditors stand to receive an acceptable dividend after the fees/outlays have been covered. Where quoted a four or five year trust deed term I think it makes sense to:

1 - See if another trust deed firm will run the case over a shorter term because their fees are lower (we have had visitors on the forum quoted five year terms by certain firms who have then done three year trust deeds after contacting one of the firms who post here).

2 - Consider whether bankruptcy, and the typical three year repayment arrangement if contributions are affordable, makes sense for them.

Just so you know, fees are charged for managing a bankruptcy as well. If you're making contributions, some of that money will be consumed by the costs of running the bankruptcy rather than being returned to creditors.

Bankruptcy can be a better option for some people. There's a bit of background about why at:

http://www.trust-deed.co.uk/certificateforsequestration.php

Much food for thought and many thanks.

We found the other advantage of a trust deed over sequestration was that we got to pay back more of what we owed,after all we borrowed the money with the intention of paying it back but due to circumstances couldnt afford to. I know not everyone will feel obliged in the same way we did,but I slept a little better at night knowing I was doing my best.

Paul

That's a good point Paul.

Creditors make a commercial decision whether to support a trust deed becoming protected or not.

At the root of that decision is whether a trust deed offers them a better prospect of a return than bankruptcy.

As we hear of so few cases where trust deeds do not become protected, I think it's a fair assumption that creditors believe that they stand to get more money back from a trust deed than bankruptcy.

You people are truly a fount of knowledge, but Nasty Nick's a veritable cesspit of cynicism!

I noticed a post recently where somebody was saying that he'd set up a protected Trust Deed and everything seemed hunky dory until a dodgy claimant appeared on the scene.

If I remember correctly they were trying to sue him for an alleged but non existent debt which he hadn't told the Trustee about. They then put in a claim when they discovered the Deed. The poster said he'd expected him to say to them 'get knotted' or at least 'prove it before I even look', but instead was left totally confused and worried that his true creditors could be affected.

Things like that are worrying to a cynic like Nasty Nick

Probably the easiest way, now that you've read the post you described, is to read the response as it clarifies the position.

Mark

quote:

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Originally posted by Mark McFadyen

Probably the easiest way, now that you've read the post you described, is to read the response as it clarifies the position.

Mark

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I understand what you and others have said, but if the pursuer has already raised a claim in court and is now asking the Trustee to consider the same claim what happens to the ongoing court action?

A protected Trust Deed should stop incomplete diligence ie the court action. The pursuer is also unable to attempt to continue with a court action and lodge a claim at the same time.

As for the mechanics of the court system in these circumstances, that's possibly a question for any legal minds viewing.

Mark

Hi nastynick.

Here are the thoughts of Mark, Shona and Kevin on the thread/subject you mention that I hope helps to answer your question. This is a debt advice forum though, and nothing should be taken as being legal advice:

http://www.trust-deed.co.uk/forum/topic.asp?TOPIC_ID=1850

Quite a unique set of circumstances. Do you have an expectation that you might find yourself in the same position?

quote:

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Originally posted by Trust Deed Assistant

Hi nastynick.

Here are the thoughts of Mark, Shona and Kevin on the thread/subject you mention that I hope helps to answer your question. This is a debt advice forum though, and nothing should be taken as being legal advice:

http://www.trust-deed.co.uk/forum/topic.asp?TOPIC_ID=1850

Quite a unique set of circumstances. Do you have an expectation that you might find yourself in the same position?

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Hopefully not - I'm just fascinated by the (as you suggest - very unusual) circumstances whereby it seems that a claim is still being pursued through the courts having been passed on to the Trustee.

Sounds to me like trying to have your cake and eat it!

Perhaps, as Mark has suggested, we'll hear a legal opinion.