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Trust Deed Forum a Reduction in Scottish Trust Deed Fees Could Result in Increased Creditor Dividends

Recent proposals to the way Scottish trust deeds are administered will affect the way trust deed fees are charged, which in turn, is likely to have a positive impact on the amount of money creditors receive from their debtors.

Cardiff, United Kingdom, April 09, 2013 --( Bankruptcy Law Reform has been on the Scottish political agenda for some time. Scotland's insolvency service, the Accountant in Bankruptcy, has recently produced an update on which of their proposed changes to protected trust deeds will be brought before Parliament later this year.

Many of the changes appear to be intended to reduce the fees that insolvency practitioners charge for setting up and administering a trust deed. These fees are collected from the payments that the client pays into this formal debt solution. Any remaining funds are then distributed to the creditors (and any debt remaining unpaid is subsequently written off).

Joint protected trust deeds will be introduced for the first time. Currently a couple would need to sign two trust deeds, one for each of them. Conjoining their financial affairs into a single solution should result in an overall reduction in the total amount charged in fees to manage their affairs.

The requirement to "advertise" a trust deed in the Edinburgh Gazette will be removed. The purpose of this advertisement was to notify creditors that a particular individual was undergoing a formal debt measure so creditors could bring forward their claims. In future, a notice will be placed on the Register of Insolvencies instead. Removing the need to advertise will remove a cost from the handling of a case.

Currently trustees agree a fee with the creditors at the start of the process. However, they can only claim this full fee if they work sufficient hours on the case to do so. This is because the work required to administer Scottish trust deeds is currently charged on an hourly basis. In the future there will be a single initial fee for setting up a case and remuneration based on a percentage of recoveries thereafter. This change may encourage trust deed providers to work more efficiently.

Trustees also currently have some latitude to increase their fees where extra work needs to be conducted on a case (over and above that which was originally envisaged). In the future any such increase will have to be approved by creditors (or by the Accountant in Bankruptcy should creditors not respond).

Protected trust deed providers will also no longer be able to seek contributions funded by social security payments. Currently there is an anomaly in the system whereby no payments can be sought from social security payments in bankruptcy, but the same restriction does not apply to trust deeds.

In combination, these changes are likely to result in a smaller percentage of client contributions being taken as fees by trust deed providers. Consequentially, creditors might be able to expect larger dividends from this form of personal insolvency in Scotland in the future.

Should these proposals pass through the Scottish Parliament as expected, they are likely to be introduced during the autumn of 2013. provides an interface between members of the public and insolvency practitioner firms offering protected trust deed services. The site has a forum where questions are asked, information is shared and support is delivered to anyone that is worrying about their debts or their existing arrangement.
Contact Information
Trust Deed Forum
Andrew Graveson
0800 043 7201

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