She didnt go to CCCS

jackie_w

I wanted to write this in a separate reply, because, I wanted to thank every single one of you for giving me the information that I have been looking for. I wouldnt have done it without you all.

I just wish that when I was in debt, I had the support from everyone on here, because its such a horrible horrible time in your life, and you do feel very very alone. Unfortunately, my sister doesnt come on to this website, goodness knows ive tried, but, i cant force her. Shes the only sibling ive got, and although she is a pain in the a##, i love her to bits, and dont want to see her robbed,

Once again, thank you thank you thank you, and if ever i meet you all, the drinks are on me:D :beer: , oh, and remember im scottish, I will probably drink you all under the table :rotfl: :rotfl: :rotfl:


Jackie

RAS

Jackie

This is what we are here for.

We see loads of folk being robbed, hassled and haressed and we want help them. Most of us have been there, so it is just a way of paying back.

coolcait

jackie_w wrote: »

Coolcait,


I would be ever so grateful if you would please post the things that the trustee must tell her, because, Im going to be with her tomorrow when the IP is at her house, ive already written down some of the questions that I want to ask him which is:-

1. what is the Statutory interest during the term (RAS, I dont think she knows about this at all, if she does, she hasnt said anything about it)

2. What are the trustees fees and how are they paid (I think my sister thinks, and I did too, that his fees would be included in the monthly amount she pays out).

3. Who is the trustee (think I have that answer, but, I just want to make sure)

4. Debt Help Scotland, say a nominal fee of £500 should only be paid to protect the trust deed, why is he saying roughly £1000

5. Will trustee take any future equity from the home, if not, is this written in the contract, and if not, why not.

6. Is my sis proposing to make a contribution to the trust dee if so, how much, and how is this paid.

Is there any other questions I need to ask?

Jackie

Hiya jackie

Those look like good questions to ask. You might find it more enlightening to ask him to explain what the £1000 covers, and how his proposal will work. Then you can dig a bit deeper for written guarantees that there won't be any further demands for 'equity release' further down the line.

The only fee for protecting a trust deed is the accountant in bankruptcy's fee for registering it on the register of insolvencies. I can't remember offhand how much that is - but it's in the region of £30-£35. It's certainly nowhere near £500. The cost of that fee, and the trustee's other expenses (eg the cost of advertising in the Edinburgh Gazette), come out of the funds paid into the trust deed.

When someone signs a trust deed, they are effectively handing their estate over to a trustee, who is supposed to manage it for the benefit of creditors.

All monies paid into a trust deed - which usually come from monthly contributions, payments in lieu of equity, release of equity - go into a 'pot'. When the trust deed ends, the first things to get paid are the trustee's fees and expenses. Then the creditors are paid.

In far too many trust deeds, the 'pot' is empty after the trustee's fees and expenses have come out. The creditors get nothing. If they do get a payment, it is usually fairly low. The average payment to creditors is around 20p in the pound (that's the average in cases where something is actually paid - it's not even counting the trust deeds which pay nothing to creditors).

This means that someone can pay say £6000 into a trust deed, but not a penny of that goes towards their debts. The trustee however is £6000 richer...

Fees can be much more than £6000. Every letter and phone call is charged for - at rates which aren't a milion miles away from those charged by banks.

Anyway, I need to look up the other stuff I promised you! BRB

Jesthar

Can't really add much to what has been said, but I will offer one observation:

It seems your sister is fixated on getting *something* signed as fast as possible, and doesn't care what it is, what risks are involved or what it could/will ultimately cost her as long as she can just get it done and signed for.

Perhaps this might be an odd way of putting things, but if instead of trying to deal with a major debt your sister was making a major purchase, would she not shop around for the best deal?

For example, say she wanted to buy a big kitchen appliance - would she really just walk into the nearest major electrical goods chain store and pay whatever was asked for the first thing a salesman pointed to which looked and sounded 'good', without checking if it was actually suitable for her needs, would fit in the available space, was a decent quality make/model (by obtaining the opinions of people who have bought one) or was available elsewhere for a cheaper price? I know I wouldn't!

Now, your sister is in a far more serious decision making position than simply buying a cooker, and that makes is even MORE important for her to consider ALL the options and resources available to her before signing on the dotted line. If she doesn't do that, she risks taking a course of action which is not the best option available to her, but can't be altered once started.

Aside from my mortgage and student loan I've thankfully never been in debt, but my advice for the meeting would to tell her that if she signs up for anything until she has done as you asked and contacted at least the CCCS and worked through everything with them, you will NOT gift her the money. That sounds harsh, I know, but is only fair, as it is your money.

If after that, and ONLY after that, the advice from CCCS advice is the same as she is currently getting (and from what I have read of the experiences of people on here, they are very good with their advice), you will consider gifting her the money once good company for this has been found (i.e. not just going with the first option considered!). Again, I'm no expert here, but I would have thought that given your sister's income level a DMP/DDP/whatever they are called in Scotland (hello from my right leg, BTW, I'm 1/4 Scottish myself!) would have at least been possible to consider - plenty of people around here who have paid off bigger debts on one!

Oh, and if the trust deed salesman (for that is what he is, and he's out for whatever he can make - they're not in the game for altruistic reasons, only profitable ones!) tries to apply high pressure tactics, such as saying more money would be needed if you don't sign today, you need to be aware of these and resist them. I've no idea if they would go along those lines, but better to be ready!

Whatever route she ends up taking, though, she needs to be aware that this is NOT the end of the matter, just the beginning of a very long road, so she may as well make sure it is the best one possible!

*hugs* Hang in there, Jackie - you're in a horrible position, but at least your sister has *someone* sensible looking out for her!

~Jes

RAS

7. What is her monthly budget? - and make sure she understands that she will have to live off this for 5 years and cannot take out any further credit.

8. How much does she pay into the Trust deed each month? - then do a quick calculation of the amount she pays in over the duration.

9. What happens if she is sick or loses her job?

10. What happens if the Trust deed fails? And perhaps what percentage of Trust deeds fail?

11. How much are his fees. - what does this look like compared with the amount she pays in?

12. What will her creditors get?

13. Why is he recommending this sort of insolvency rather than bankruptcy? What are the benefits to your sister? What are the down-sides?

And ask your sister if she fully understands that a Trust deed is an act of insolvency like bankruptcy.

coolcait

Hiya again Jackie

OK. (Cracks knuckles ). If you want to quote regulations at him, all of this comes from the Protected Trust Deed (Scotland) Regulations 2008 (http://www.opsi.gov.uk/legislation/scotland/ssi2008/ssi_20080143_en_1)

Before a person signs a trust deed, the trustee must make them aware that signing a trust deed could:

- lead to them becoming bankrupt
- cause problems with future credit
- mean that their house might be sold, or that they may have to move home
- require them to pay contributions
- affect business prospects
- affect employment prospects
- become public information

The trustee must also give the person a copy of the Scottish Government’s Debt Advice and Information Package. That’s this baby: http://www.aib.gov.uk/Resource/Doc/4/0000516.PDF.

The trustee MUST do all of that, by law (the regulations cited earlier on). It’s regulation 6, to be exact. And then the trustee and the person entering the trust deed must sign a statement saying that the trustee has in fact done all of this.

If this ISN’T done, then the Trust Deed can’t become protected (the statement is one of the things which a trustee has to send to the Accountant in Bankruptcy in order to protect the trust deed - that‘s regulation 10 ).

Arguably, if he hasn’t done all of the above, the trust deed may not even be valid. It certainly wouldn’t inspire me with confidence as to his efficiency and/or integrity :eek: .

The trustee MUST also tell all creditors how much they expect to be able to pay out to them (regulation 8 :rolleyes: ). I see no harm in asking the trustee to share that information with your sister - along with a direct enquiry about how much his fees will be. If he feels unable to say, because it will all depend on how much work is done on the case, ask him for his office’s average hourly rate, and multiply that by the average number of hours spent on a straightforward trust deed case (he should be able to provide those averages). Make sure you’re sitting down before starting this calculation!

Since you’ve got your calculator out (I forgot to suggest that you take one along! ) ask what your sister’s contributions will be. They’re usually paid monthly, and trust deeds usually last for three years. So multiply the contribution by 36 - that’s how much your sister will be paying to the trustee - plus the £1000 to ‘protect’ the equity. Compare that figure to the estimated fees, and you’ll have an idea how much will actually go to your sister’s creditors. Remember that the trust deed is supposed to be for the benefit of creditors. You probably won’t have to ‘act’ shocked at this point.

Take the calculator again, and enter the total amount of your sister’s debts. That figure should be on the table, as she has to tell the trustee exactly what she owes. Divide it by the monthly contribution she’s making to the trustee. What’s the answer? If it’s less than 120, then no money adviser worth his or her salt should be saying that your sister is not eligible for DAS. 120 months, ie 10 years, is generally accepted as being OK for DAS.

In fact, if that’s the answer, the TRUSTEE should be making her aware of the fact that she could be eligible for DAS. He is supposed to be making her aware of ALL her options (back to regulation 6 again ), not just going down the trust deed route.

Phew! Hope that didn’t send you to sleep. And hope it helps!

jackie_w

Thanks again everyone for your replies, (yes I am up at this ungodly hour lol),

CoolCait, I have actually copied and pasted your last reply, and emailed it to my sister this morning, so that when I get to her house, I can tell her to have a look at it.

Sorry I didnt get back to any of you yesterday, I couldnt get on the pc.

Coolcait, I dont know if you will get this mssg before I get to my sisters house, but, if the trustee take their fees first, and then the creditors get the rest, is that where the trustee can come in and say that they need to revalue the home because they will make out that they need to get their fees? Also, if for example she does decide to go with this, and all her creditors refuse, and she does finally decide to go to the CCCS, can she then change her mind and go onto a payment plan? I know this is all back to front, but, im thinking along these lines incase she doesnt listen to me later today, but, might listen if he comes back and says her creditors refuse.

Sorry for all the questions.


Jackie

jackie_w

Sorry just one other question.


If she decides not to go down the route of a protected trust deed, and she doesnt qualify for a DAS scheme, what else can she do.

I dont know at the moment how much she is paying every month under the trust deed, and when I spoke to my mum yesterday, she said my sis owes in the region of £40,000 - £50,000.


Jackie

LilacPixie

Jackie - my understanding was if you sis goes the trust deed route and the creditors don't agree, one or more creditor can then petition for her bankruptsy as wanting to enter into a trust deed is seen as an act of insolvency.

Does your sister understand that the family home is basically at risk.

rough calc, 50k over 10 years with no interest is £420 ish a month.

RAS

Jackie

No much to add at the mo, except a big hug and my best wishes for today.

best of luck.

And if it does come to it - certainly under English law, with no equity at the mo, going BK might be a perfectly valid and less risky option, Even with a three year payment agreement (the BK budget is more favourable so she would pay less). But you need advice on Scottish law.