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Are There Any Free Scottish Trust Deed Services?

14th November 2016

Trust Deeds in Scotland are never provided for free. They can only be set up by using the services of an “insolvency practitioner”. These professionals work for private sector companies rather than organisations that provide free services.

There are of course many excellent providers of free debt advice, of free debt management plans, and also of free DAS (debt arrangement scheme) services. None of these organisations can provide you with a free protected trust deed however.

Trust deeds (and bankruptcy) always involve the payment of fees no matter what source of help you initially select. This applies equally to debt charities, private sector firms, and to public sector money advice teams. 

Fees Are Taken From Your Contributions

When entering a trust deed you’ll agree an affordable amount which you’ll then pay over every month. This amount is paid by you into your trust deed via your chosen insolvency practitioner (who is now known as your “trustee”).

The trustee then draws their fees from these payments that you’re making. You do not have to find extra money to pay the fees. They’re included in the payment you’ve already agreed to make.

Your trustee should have informed you about these fees before you signed your trust deed. Your creditors will also have been informed about the fees when your repayment proposals were first circulated to them.  The creditors can object to these fees if they consider them to be too high.

Doesn’t This Mean That The Creditors Are Paying?

Not really. It’s your money that is paying the fees of a professional that you chose to appoint.

It is usually fair to say that the fees are drawn at the expense of your creditors. It’s money that could have gone to them otherwise and which now will be written-off. However, there are circumstances where this isn’t true and you’d be very much covering these costs directly.

One example is if your trust deed fails. You’ll still owe your creditors money, and much (possibly all) of the money that you’ve paid in will have already gone on covering the fees of your trustee.

Another example is if you come into a lot of money during your trust deed. If this happens you’ll have to pay the funds over to your trustee. They’ll repay your creditors (in full) and then they’ll add their fees on top. Any amount of money that’s eventually returned to you will have been reduced by the amount of your total trust deed fees and costs.

Why Does Some Advertising Suggest That Trust Deeds Are Free?

Some firms appear to have taken the view that appearing to be “free” makes it more likely that members of the public will choose to use their services. Indeed, some less reputable “lead generators” present highly misleading promotions that draw in customer enquiries that will then be sold on to the highest bidder.

One way that this is accomplished is to offer “free trust deed advice” or some similar type of marketing slogan. They’ll justify this, for example, on the basis that they don’t charge people to advise them about whether they qualify for a trust deed. However the phrasing is often selected in order suggest that people can get rid of their debts at no expense at all.

The reality is that almost every type of debt advisory organisation charges no fees whatsoever to advise people about how to tackle their debts. Many of the commonly used debt solutions do however incorporate fees of one type or another, so reputable companies try to make this very clear right from the start.  

Are You Thinking About Starting a Trust Deed?

Even though trust deeds in Scotland aren’t free, they are an excellent option for many people to win back control over their finances. Our professionally qualified debt advisers stand ready to assist you. Please contact us for further help or advice.

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