whats insolvency & a trust deed ?

jackie_w

Morning everyone,

I had posted the other day about my sister being in bother with debt, and convinced her to call CCCS which she did. They sent out paperwork to her, and are contacting her on the 14th October.

She was speaking to a collegue at work, who was explaining that her friend went through the same thing, but went to a company called Clear Financial Solutions. So, my sis called them, and they explained that they would send someone out to speak to her, but, they would arrange to speak to all her creditors, they would be able to freeze her interest, and would reduce the amount she has to pay . They have also advised that she would only need to pay this for approx 3 years, and then she would be debt free. Obviously they have said they would take a fee for this every month, which I think she said would be for about £39.50, but, this would come off her monthly payment. Thy have advised her that she wont lose her house.
They have also mentioned insolvency, and trust deed.

I have never heard of this before, and Ive told my sister that I dont think it can be right because, I dont understand how you can get some of your debt written off!!!!!
Ive told her she should stick with the CCCS, becasue they are a charity organisation. She has still kept her appointment with the CCCS, because she still wants to speak to them.

Has anyone every heard of any of these types of companies, and what does insolvency and trust deed mean. We live in Scotland if that makes any difference.

Jackie

milliemonster

Your sister needs to stay away from this company, CCCS will do exactly the same thing CFS are offering but for FREE, ie they won't take £39.50 out of her money every month in a 'fee' and all the money will go straight to her creditors.

What both are talking about is setting up a Debt Management Plan where they will look at your sister income and outgoings and what surplus she has left over to service her unsecured debts, they will then take a proportion of this and divide it up between her creditors, they will liaise with her creditors on her behalf but as I say, CCCS do this for FREE

Insolvency simply means you do not have enough cashflow and assets to meet your what you owe, a Trust Deed I think is the Scottish version of bankruptcy. I think it seems this company have mentioned the possibility of an IVA or bankruptcy/trust deed to your sister but neither of these should be taken lightly, there are numerous cases of IVA's being missold over the last few years and they are only appropriate for a small number of people, BR should also not be taken lightly and not before all other avenues of repaying debt have been explored

jackie_w

Hi Millie,

I think the thing that is attracting her to this company is the fact that she will be debt free in 3 years!!!!!! To be honest and I know she is my sister but, I think that is a bit of a cop out. I personally dont think thats right.

She is worried that if she goes to the CCCS she will be paying this forever, which TBH I think she should be doing anyway as she ran up the debts in the first place. Is that bad to think that way?

Jackie

fermi

CCCS have a version of their website for those in Scotland.

They have a section explaining all about Trust Deeds here:

http://www.scottishdebtline.co.uk/faqs/iva.htm#ivaa

It is a legal form of insolvency which can result in your bankruptcy/sequestration if you default on the agreement, so it is not to be entered into lightly.

They make the people/companies arranging them substantial profits from the fees, so the advice from the company who might arrange one is likely to be a bit biased.:rolleyes:

She needs to talk to CCCS first to discuss with someone impartial what is best.

If a Debt Management Plan is best then CCCS can arrange one without any fees. If a Trust Deed really would be best then they can help her arrange one with someone who won't rip her off.

jackie_w

Hi Fermi,

Thanks for replying. I have called her just now to explain what your link was saying, and have told her that I think she should go to CCCS, and they will arrange everything for her.

Hopefully I can get through to her.


Jackie

milliemonster

I think as well she needs to think that even if she takes out one of these Trust Deeds she may be debt free in 3 years but it will completely ruin her credit record for much longer than this (not sure how long in Scotland but a further 6 yrs in England) so it's not an easy way out as your sister seems to think.

coolcait

Hiya Jackie

I agree with everything that's been said so far.

Trust Deeds are similar to IVAs. The trustee's fees, as far as I've heard are usually at least £2,000-£3,000, and they can often be more - sometimes even into five figures. If your sister owns a house, then the equity in that property willl have to be released into the trust deed in some way. It is, therefore, still possible that she could lose her home (if she can't pay the amount of the equity), and her trustee is supposed to make this clear to her before she signs. If she fails to keep to the terms of the trust deed, her trustee can apply to have her made bankrupt. Signing a trust deed is evidence of apparent insolvency, and if enough creditors object to it and it fails to become protected, she can be made bankrupt by her trustee, a creditor, or herself.

A trust deed will be advertised in the Edinburgh Gazette, in the same way that bankruptcy is advertised. And, although most trust deeds last for three years, some can run on for longer. Your sister will not be discharged from her trust deed until her trustee discharges her. there is no automatic discharge. And her credit record will be affected for longer than three years (I think it's six years, but not entirely sure on that!)

If your sister has enough surplus income to go onto a DMP, then it's probably worth her while finding out about the Debt Arrangement Scheme (DAS). DAS works in the same way as a DMP, but if your sister is accepted onto it, her creditors HAVE to freeze interest, fees and charges by law, and these will be written off when the programme is completed. They can't take any further legal action against her, and her house will be completely safe. There's more information about it on here:

www.moneyscotland.gov.uk

She's lucky to have you to look out for her like this, so good luck to you both!

kev1980_2

coolcait wrote: »

Hiya Jackie

I agree with everything that's been said so far.

Trust Deeds are similar to IVAs. The trustee's fees, as far as I've heard are usually at least £2,000-£3,000, and they can often be more - sometimes even into five figures. If your sister owns a house, then the equity in that property willl have to be released into the trust deed in some way. It is, therefore, still possible that she could lose her home (if she can't pay the amount of the equity), and her trustee is supposed to make this clear to her before she signs. If she fails to keep to the terms of the trust deed, her trustee can apply to have her made bankrupt. Signing a trust deed is evidence of apparent insolvency, and if enough creditors object to it and it fails to become protected, she can be made bankrupt by her trustee, a creditor, or herself.

A trust deed will be advertised in the Edinburgh Gazette, in the same way that bankruptcy is advertised. And, although most trust deeds last for three years, some can run on for longer. Your sister will not be discharged from her trust deed until her trustee discharges her. there is no automatic discharge. And her credit record will be affected for longer than three years (I think it's six years, but not entirely sure on that!)

If your sister has enough surplus income to go onto a DMP, then it's probably worth her while finding out about the Debt Arrangement Scheme (DAS). DAS works in the same way as a DMP, but if your sister is accepted onto it, her creditors HAVE to freeze interest, fees and charges by law, and these will be written off when the programme is completed. They can't take any further legal action against her, and her house will be completely safe. There's more information about it on here:

www.moneyscotland.gov.uk

She's lucky to have you to look out for her like this, so good luck to you both!

Totally agree with what coolcait has said!

At the moment i'm on a DMP with the CCCS and have just had my review. The CCCS have advised me to investigate the DAS scheme as a better option to the DMP as DAS will freeze / stop all interest and charges and no legal action can be taken.

I'm having my DAS interview with an approved money advisor, the approved money advisors are usually located at your local council office or CAB. They are the only people who can set the DAS scheme up.

Also had an interview for a trust deed with KPMG they were recommended by CCCS. KPMG are brilliant and do not pressure you into the trust deed instead they tell you to seek all options available to you including DAS, speaking impartially to the CCCS etc before making a decision on what to do.

For my position a DMP is not really the best option as the creditors are under no obligation to freeze interest or charges. I'm in Scotland so DAS or a Trust Deed is going to be best for me.

jackie_w

Hi There,

My sister doesnt have any equity on the house, im afraid its mortgaged up to the hilt.

She managed to get a co-op cashminder account set up yesterday, so, she is going to arrange to get her wages paid into that every week, and arrange for her mortgage to be taken by direct debit.

If she has to go to a trust deed, then I think it would be best if the CCCS arranged for her to speak to someone. I would trust them to look after her best interests.

Im a bit concerned that her creditors will refuse for her to go onto any kind of payment plan. Does that usually happen?

Her husband (well they have split up), has said that he thinks they should both go to the same people, so, if she does go with the CCCS, then he will go to them too, but, if she goes with that other company, he is saying he will go with them. I dont really know what is the best way to advise her, so, Ive told her that she should speak to CCCS and wait to see what they say.

I really appreciate the time all you people have taken to reply. Still trying to get my sister to come onto this site, so, she can see for herself that she isnt the only one in this position, and that it might help her to "talk" to others going through what she is going through.

Jackie xx

kev1980_2

Hi Jackie,

Thats good your sister has managed to setup a basic bank account with the COOP.

With regards to not having any equity in the house what would happen there is that she would pay a fee of £500 if she went onto a Scottish Trust Deed, instead of having to find equity.

Remember and check out the DAS as well!

Good luck with what ever option she chooses.

jackie_w

Thanks Kev,

After I posted this morning, I spoke to my sister, and with the way she was talking, I dont think she will go with the CCCS, she is going to go with this other company. I have explained that I dont think this is a good idea, and told her if the CCCS think a trust deed is the best option for her, they will arrange it. She said that the CCCS told her that they would charge money for this something like £20 odd but, I dont know if she has picked this up wrong, or if its a one off payment or a monthly fee. Is this right?

She was really snappy with me on the phone, and eventually hung up, so, Im just going to stay out of it from now on. Ive done all I can to help her out except loan her the money. I think she will go with these other people because my mum has told her that she thinks this will be better because her debt will be paid off in 3 years !!!!!

Jackie