Protected Trust Deed costs and fees
You do not usually pay a trust deed fee up front. That does not make it free — the fees come out of what you pay in.
Applies to: Scotland
What to do now
- Ask each firm for its fixed fee and percentage in writing.
- Ask how much of your first year’s contributions will go on fees.
- Talk to a free money adviser — free debt advice.
How the fees are structured
Under the Protected Trust Deeds (Scotland) Regulations 2013, the trustee’s pay is made up only of:
- a fixed fee for running the deed from start to finish;
- an additional fee worked out as a percentage of the assets and contributions the trustee realises;
- outlays — certain costs, including the Accountant in Bankruptcy’s audit fee.
Both the fixed fee and the percentage are recorded on a standard form that goes to creditors during the five-week period before protection, and then to the Accountant in Bankruptcy. The trustee cannot claim for work done before the trust deed was granted.
Who pays, in practice
You pay one monthly contribution. The trustee’s fees and outlays come out of that money, and out of any assets realised, such as home equity. Creditors receive what is left. So while you may not see a separate bill, the fees reduce how much of your debt is repaid. If extra contributions or equity are added, the percentage fee is applied to them too.
What to compare between firms
- The fixed fee and the percentage rate.
- The expected total paid to creditors, in pence in the pound.
- How home equity is to be dealt with, and the fee on it.
- Whether the firm is a licensed insolvency practitioner, and who will be your trustee.
- Whether you were told about the Debt Arrangement Scheme and other options.
Fees vary between firms. Comparing more than one is reasonable.
Other costs to weigh
- Time. At least 48 months of contributions.
- Assets. Equity and other assets may be released.
- Windfalls. Inheritances or compensation during the deed can be claimed.
- Credit. Six years on your credit file and a public record on the Register of Insolvencies.
Free alternatives to look at
The Debt Arrangement Scheme costs you nothing: its fees are borne by creditors, and approved money advisers do not charge. Free advisers also help with sequestration applications, including the Minimal Asset Process, which have their own fees and consequences. A trust deed cannot be set up by a free adviser, because the trustee must be a licensed insolvency practitioner.
This page explains how the solution works. It is not a recommendation, and it cannot tell you whether it suits you — a free, regulated debt adviser can look at your full situation.
You never have to pay for debt advice. MoneyHelper (government-backed), StepChange, National Debtline and Citizens Advice all give free, confidential advice with no obligation.
Common questions
Do I pay upfront for a trust deed?
Not usually. The trustee's fixed fee, percentage fee and outlays are taken from your contributions and any assets realised.
How much does a trust deed cost?
It varies between firms. The trustee is paid a fixed fee plus a percentage of what is realised, both shown on a form sent to creditors, so ask for the figures in writing.
Is there a free alternative to a trust deed?
The Debt Arrangement Scheme costs you nothing, as fees are borne by creditors, but you repay in full. Free money advisers can explain all the options.