Protected Trust Deed Fees

feeling_robbed

My partner and I (now husband) realised around 4 years ago that we were in serious financial difficulty. I’d not long had a baby and after returning to work having had a very good job, my salary was 50% of what it had previously been. It took us longer than it should have to re-adjust our lifestyle and of course had increased expense with a new baby. My husband was made redundant and having struggled for a year and a half, living off credit cards, we knew that we had to do something serious to sort out our problems. Having visited CAB, we entered into a Protected Trust Deed and heaved a sigh of relief as the debt letters and telephone calls gradually started to subside.

We entered into the TD with £64k debt and a mortgage of around £70k with equity of approx £27k at the time. During the 3 years, we paid a combined total of £420 per month and because of annual bonus payments have actually contributed £20k in total to the TD. I knew that equity was likely to continue to grow in the 3 year period but there was a probability that it would slow down over the final 1.5 – 2 years. Our property is now valued at £140k and would probably sell for £150k.

I’ve just had the final settlement figure and breakdown from the Trustee (having chased this since the end of May) and I am absolutely astounded. We will be paying 100p in the pound to all of our creditors plus statutory interest at 8% per year. I’m actually quite happy to pay the creditors back everything we owed and feel very fortunate that we are able to do this because we have been lucky with the equity in our property. I hadn’t realised until about the end of year 2 however, that although the interest is frozen as you enter into the TD, you are expected to pay statutory interest at the end for the period of the TD. Again, this does make sense but it definitely wasn’t clear when we signed on the dotted line.

What is really galling is the Trustee’s fees. We are being charged a total of £39k in fees, with £27k being the Trustee’s time costs. This is way in excess of the fees mentioned in the site’s IVA Guide. I can’t believe that our settlement figure is now £101k and as a result, we will not be able to re-mortgage but will definitely have to sell.

I’m confused …. if we didn’t have any equity, there would only be £20k in the “pot”. Does this mean that our creditors would have got nothing??? How do our people in a TD who might not have been fortunate enough to have any property or equity pay these costs from their contributions? Surely there should be a set fee. I’m astounded that this is allowed to happen in the financial industry as it profiting from others financial vulnerability!! I knew that there would be a fee and that it was agreed with creditors and thought it might be a few thousand but never in my wildest dreams did I expect this.

Its unlikely that we will even have enough funds left from the sale of the property to allow us to make the 6 months advance rental payments that landlords are looking for through letting agencies as security because of our poor credit history.

We’ve been looking forward to this point for the last 3 years which have been very tough (not that I expected it to be easy!!) but all I feel is disheartened. I feel like the victim of a crime and want to warn others who could be in the same situation. We now feel very naive, as perhaps Bankruptcy would have actually proven to be a better option for us.
:mad:

beanielou

Go back to them & check that the amount is correct.
It seems very very high to me.
Speak to someone at your local money advice/CAB as well.

coolcait

Hiya

I'm so sorry to hear about what happened to you. It's cases like yours which make me so anti-Trust Deed!!

It might be too late, but you do have the right to ask the Accountant in Bankruptcy to audit the Trustee's fees. It's a very short timescale though - something like 14 days after you get your copy of the accounts.

You can also write to the Institute of Chartered Accountants of Scotland - though I doubt if they'll do anything to put a stop to the way their members make money! :rolleyes:

Don't know if there's any point in writing to your MP...

I'm a bit surprised that the CAB didn't suggest the Debt Arrangement Scheme to you - that would have protected your house.

There's not much else I can say other than good luck! At least you can move forward debt free now. :T