Fees to Drop for Insolvency Options, Says Debt Solutions Company www.scottishtrustdeed.co.uk

    GLASGOW, SCOTLAND, April 30, 2013 /24-7PressRelease/ -- The proposed changes, which are to be brought before Scottish Parliament later this year, are part of the drive to reform bankruptcy laws partially due to creditor complaints about how little money is being received by them compared to the insolvency practitioners that administer the trust deeds and sequestrations.

Normally, under the terms of a Trust Deed the client makes a monthly payment to an insolvency practitioner, who deducts their fees and then distributes any funds remaining to creditors as part of the Trust Deed agreement. These fees are agreed at the start of the trust deed process and are based on an hourly rate. The insolvency practitioner must work to the agreed number of hours in order to claim in full. However, if additional work needs to be done beyond what was originally agreed there is scope for the fees to increase. Once the agreed period of the trust deed has elapsed and the debtor has made all the required payments the rest of the debt is formally written off. In many instances this has been up to 70% of the debt.

The new proposals will change all of this. Insolvency Practitioner's will be expected to agree a single initial fee for setting up a trust deed, with their ongoing administration fees covered by a percentage of funds recovered on behalf of the creditors. Any additional work that incurs extra fees will have to be approved by creditors or by the Accountant in Bankruptcy. This will ensure creditors will receive the maximum possible amount of the money they are owed.

However the changes to the fee structure are not the only ones that could insolvency practitioners losing out.

Couples will be able to have joint Protected Trust Deeds, which is in contrast to the current rules which force each individual to have their own, despite their finances being part of a joint pot. This will result in the reduction of the fees charged overall by up to half and allow a couple to manage their financial affairs on an equitable joint basis.

In addition, social security payments will be prevented from being part of the allowable sources of income for a protected trust deed. This is currently the case with bankruptcy awards and the same rule will now apply to protected trust deeds.

A spokesperson for Trust Deeds Company, Scottishtrustdeed.co.uk said: "The changes that the Accountant in Bankruptcy is proposing will ensure that creditors get more money than they would do under the current regulations, however it could be at the expense of the insolvency practitioners that are administering the debtors' case.

"While the new rules will make creditors very happy because they will get a much larger dividend than before, there may very well come a time when it is at the expense of the insolvency practitioners, who will end up out of pocket as a result."

Scottish Trust Deed provide help and advice on the Scottish Trust Deed debt solution. With a Trust Deed you can write off up to 90% of your debt and be completely debt free in 36 months. Our experienced advisors are only a phone call away to help you with your debt problems.

Website: www.scottishtrustdeed.co.uk

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