Scottish Trust Deed Fees
Updated: 21st September 2016
How much are Scottish trust deed fees?
The fees charged for handling trust deeds will vary for a number of reasons. Some of the important factors involved include:
- The fee expectations of the trust deed firm you choose (they vary).
- The length of the trust deed that you agree to.
- The amount that you pay each month.
- Whether any lump sums are also paid into your trust deed.
- Restrictions placed on the level of fees by your creditors.
Your trustee will suggest two types of fee when they contact your creditors. The first fee is a lump sum to cover the costs of setting up your trust deed. The second fee will be a percentage of the money that they actually do collect into your trust deed prior to your discharge. This is your trustee’s payment for the ongoing management of your case.
Who pays the fees?
Some firms imply in their marketing that your creditors pay the fees for the trust deed. In reality, this claim might be seen as a little dubious.
Insolvency practitioners collect their fees from the money that has been paid into your trust deed. This was your money, paid in by you, to address your debts. You’re paying the fees.
It could be said however that these fees are being drawn by your trustee at the expense of your creditors. It’s money that might have otherwise gone to your creditors. The more that your trustee charges, the less money your creditors eventually receive. This is why creditors work hard to influence how much trust deed providers can charge.
One circumstance in which the fee amount is felt most strongly by a debtor is where their financial circumstances improve during a protected trust deed. If you get a massive pay increase, or you come into money before your discharge, you might end up paying more than you owed into your trust deed. This is because you’d be paying back your debts in full (perhaps with some interest added) and you’d also be paying your trustee’s fees on top. There’s no doubt that you’re paying the fees in this scenario.
Should you care about the fee for a protected trust deed?
Yes! There are several very good reasons why you should be concerned about how much a trust deed provider intends to charge you for their services:
- A firm might be seeking to boost their fees if they ask you to enter a trust deed running for longer than four years. Other firms with lower fee expectations might offer you a shorter repayment term.
- Your creditors may reject your trust deed (prevent it from becoming protected) if they think your trustee is trying to charge too much.
- You may be keen to see your creditors receive back as much as possible of what’s owed to them. Fees eat into this amount.
- If things take a turn for the better, you might end up paying for these fees fully you’re your own pocket. While not exactly an everyday event, this happens more than you might think.
If you’re thinking about starting a trust deed, you’ve probably got more pressing things on your mind than the fees involved. It’s sensible to consider this fee situation however, and especially so where you’re being quoted a term longer than four years or there’s some chance you might come into money before you’re discharged.
You have a choice of trust deed providers and it will normally cost you just a little bit of time to speak to more than one of them. In the long-run this could turn out to have been a very important call to make.
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