Debt Arrangement Scheme (DAS)
There are no setup fees payable by an individual entering into a Debt Payment Plan (DPP) through the DAS. This is the same for all individuals whether they use an insolvency practitioner/private sector firm (e.g. Harper McDermott Ltd) or a public sector organisation (e.g. CAB or local authority Money Adviser).
The costs of administering the scheme are borne by the creditors and are the same for all DAS providers i.e. from every £ received into the scheme, 22p is used to pay these costs; this 22p is split between the DAS Administrator (2p) and the Money Adviser (20p). There may also be a payment made to the Payment Distributor (PD) and, if so, this would result in the Money Adviser’s fee being reduced by the same amount as paid to the PD (normally around 5p in the £). The remaining amounts are distributed amongst all creditors on a pro rata basis and a successfully completed DPP deems all debts to be repaid in full.
The fees and expenses of your DPP will be explained in detail in your DAS paperwork. You do not have to pay additional fees other than those you agree to and if you do not proceed with a solution after seeking advice then there is no charge for our services.
Based on our average DAS; the following is an example of the fees payable and payments to creditors:
- Monthly payment: £271
- Debt level: £20,857
- Payment term: 77 months
It is essential that you maintain your agreed monthly contributions into your DPP. If at any point during the term of your DPP you feel you can no longer afford the payments agreed, you must contact your Money Adviser or their staff to discuss. Contacting us to discuss any payment difficulties you are experiencing or changes in circumstances is essential, DPPs under DAS do provide an element of flexibility. You may be entitled to a payment break in certain circumstances (such as illness or redundancy) or your Money Adviser may be able to review and amend your payment to suit your changed circumstances – this is subject to creditor approval. If you fail to keep up with your agreed payments and fail to contact your Money Adviser to discuss, your DPP may be revoked, leaving you liable for payment of your debts at their original contractual payment level (including interest and less any payments made to date).
Protected Trust Deeds (PTD)
All fees charged and expenses payable by your Trustee during a PTD are taken from the income contributions made by you and/or from the sums realised for your assets, if applicable. The fees and expenses of your PTD will be explained in detail in your Trust Deed paperwork. You do not have to pay additional fees other than those you agree to and if you do not proceed with a solution after seeking advice then there is no charge for our services.
- The Trustee’s fixed fee for a 4-year Trust Deed ranges from £1,000 to £2,500, this will vary depending on the work involved in your PTD and your creditors’ acceptance criteria.
- The Trustee’s realisation fee is charged based on a % of the funds received into your PTD, this typically ranges from 10-20% of the value of the funds.
Your creditors will be advised of the Trustee’s fees and expenses in your Protected Trust Deed proposal. Should you feel it necessary, you and/or your creditors can request the Accountant in Bankruptcy (AiB), the Scottish Government Agency that supervises Protected Trust Deeds, to carry out an audit of the Trustee’s fee. The AiB charge a 5% fee for this audit, this reduces the funds that will be distributed between your creditors.
The fixed and realisation fees are based upon the amount of work undertaken to set up your PTD and administer it during the 4-year term (can be longer, if required). Your Trustee along with suitably qualified members of his staff will undertake these tasks (this list is not exhaustive):
- Advice process.
- Preparing your Protected Trust Deed proposal.
- Obtaining protected status for your Trust Deed.
- Dealing with your creditors, the AiB and any relevant third parties on your behalf.
- Monitor payment of your income contributions.
- Realising any assets for the benefit of your creditors.
- Adjudicating on creditors’ claims.
- Paying dividend/s to your creditors.
- Dealing with any changes in your personal or financial circumstances during the PTD that could affect your payments and if necessary, liaising with your creditors regarding these changes.
- Carrying out an annual review of your income and expenditure
- Reporting annually to your creditors, updating them on the progress of your PTD.
- Finalising the administration of your PTD, processing yours and the Trustee’s discharge.
Based on our average PTD; the following is an example of the fees and expenses payable, the dividend payment to creditors and the possible debt write-off achievable in an average PTD:
- Monthly payment: £206
- Debt level: £21,460
- Payment term: 48 months
|Total expected payments||£206 * 48||9,888.00|
|Trustee’s Fixed Fee||2,500.00|
|Trustee’s Realisation Fee||20% of £9,888||1,977.60|
|Total Trustee’s Fee||4,477.60|
|Accountant in Bankruptcy||480.00|
|Registers of Scotland||50.00|
|Software licence fee||180.00|
|Funds available for creditors||4,660.40|
|% return for creditors||22%|
If at any point during a PTD, you feel like you may struggle to pay your income contribution, you must contact us immediately. It may be possible to arrange a change in payment amount or a payment break due to extenuating circumstances, assuming these could be evidenced. If you breach your payment agreement without making contact with us, you could be refused your discharge from the PTD which would leave you in the same position as you were before signing the Trust Deed i.e. having to repay all remaining debts in full (plus interest and minus any repayments made via the Trust Deed to date) and dealing with all creditors. In some cases, you may be sequestrated, (made bankrupt), for failing to comply with the terms of the Trust Deed. It is also possible for the Trustee to go directly to your employer and have the income contribution deducted from your salary, this will only happen if two consecutive payments have been missed and you are not co-operating with the Trustee.