Reviewed 5th December 2019
A Scottish trust deed is a formal arrangement to repay creditors a proportion of their debt, and typically lasts for four years. The process is administered and overseen by a licensed insolvency practitioner (IP), known as the trustee.
During the trust deed term the trustee is required to make various decisions regarding the arrangement, and is closely involved at all stages. If your circumstances worsen, for example, you would inform the trustee so they could potentially renegotiate for a lower repayment amount.
In many cases this arrangement works well, and any issues are dealt with by the trustee with few problems. But what happens if you’re unhappy with your trustee during the trust deed term – are there any formal avenues for complaint, and could you change your trustee if necessary?
Initially you should talk to the trustee and make your complaint as it may be possible to resolve it quickly. Whether it’s a specific action that’s brought about the complaint, or you’re not happy with the trustee’s general approach, it’s a good idea to make a few notes before you speak to them so you can get your point across clearly.
Once you’ve spoken to the trustee don’t forget to follow up with a written explanation of the issue(s). Send the letter by recorded delivery, and keep a copy in case the problem isn’t resolved and you need to take it further.
Although you may not feel like talking to the trustee directly, your ability to take the matter further relies on the fact that you’ve attempted to resolve the issue by speaking to them.
If the trustee hasn’t rectified the situation to your satisfaction, you can take your complaint to their regulatory body. Independent Recognised Professional Bodies, or RPBs, authorise their members to act as insolvency practitioners and undertake regular monitoring.
The professional bodies themselves are regulated by the Secretary of State, so an additional layer of accountability is in place to ensure the IP members meet requirements and standards in terms of training, qualifications, and experience.
Contacting your trustee’s professional body, therefore, is the natural next step. You can do so online via the gov.uk website, or by letter. If you don’t know to which body they’re affiliated, the details will be displayed on the formal documentation issued during the course of entering your trust deed.
If your complaint is upheld by the trustee’s professional body, a number of outcomes are possible including having their license withdrawn. This would require the appointment of a new trustee. If the complaint isn’t upheld by the Recognised Professional Body, you may be able to use their independent complaints review process if there’s one in place.
The Accountant in Bankruptcy is the government agency that regulates and audits insolvency processes in Scotland. Although they may not be able to change your trustee, they do have the power to overturn a trustee’s decision when they think it is appropriate.
You can complain in person or in writing to the AiB, and again, you should set out your complaint clearly to ensure the circumstances and reasons are fully understood, backing it up with documentary evidence if possible.
Similarly, you can apply to the Scottish court to reverse or overturn a decision made by a trustee. It’s crucial to obtain professional advice prior to making an application, however, and ensure you’ve followed the correct procedures leading up to that point.
If you’ve made your complaint through the channels above, in certain circumstances you may be able to change your trustee. If serious misconduct has occurred, for example, or your trustee has not upheld the standards and requirements of their position it’s possible that their license will be revoked by the professional body concerned.
Scotland Debt Solutions has been helping Scottish residents to escape debt since 1989, and can advise on the best way to proceed if you’ve entered a Scottish trust deed and are unhappy with your trustee.
Please contact one of our partner-led team to arrange a free same-day consultation. We work from offices around Scotland, and can provide the reliable independent advice you need.
The UK’s financial services regulator has told banks and other lenders they ought to give their customers a break from repayments if they need one as the coronavirus crisis unfolds.
The Scottish government has taken a series of steps that it hopes will help to ease some of the financial pressures being felt by people with debt problems across the country.
Applying for a trust deed has been on my mind for some time but I’m concerned that all creditors may not agree to my trust deed? What if one of them doesn’t agree?
Yes, although a Trust Deed is not a court process the creditors you have made defaults with are likely to notify the credit reference agencies that you have missed payments. There will be an entry on the Register of Insolvencies that you are subject to a Trust Deed.
A Trust Deed can be setup very quickly. Once you have discussed your financial situation in full with an Advisor and taken time to consider that this is the most appropriate option taking all factors into account. The Trust Deed document and accompanying paperwork can be signed which then gives the Trustee the relevant powers to act on your behalf. The Trustee will make contact with all your creditors and from that point you can stop making payments to the individual creditors and pass all correspondence for the Trustee to deal with. Thus relieving you from the pressure instantaneously.
The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level.
There are no initial setup or additional hidden costs in a trust deed. The Trustee’s fee’s and outlays for administering your trust deed are met from the contributions you pay in on a monthly basis or/and from the assets which may have to be realised in your Trust Deed. The Trustee is paid prior to making a distribution to your creditors. The Trustee’s fees are broken down into three categories, fixed fee, percentage of realisations and costs and expenses associated with the Trust Deed.
A protected Trust Deed is binding on your creditors. It means that if you comply with the terms of your trust deed then the creditors cannot take any further action against you to recover any debts you might be due to them. They cannot arrest your earnings or petition for your sequestration whilst you are subject to a Protected Trust Deed. Unlike an ordinary Trust Deed which is not binding on your creditors. If when presented with your Trust Deed Proposals more than half in number or one third in value of creditors object to your Trust Deed then it will fail to reach protected status.
The Trustee will write to you every six months throughout the period of your Trust Deed to monitor and assess your Financial Position and your ability to maintain the contribution at the current level. In addition to this the Trustee will explain at the outset of the Trust Deed that should you have any change in circumstance which will affect your ability to make a contribution you must update him with immediate effect. If you have a change in circumstance and notify the Trustee of this providing evidence to substantiate your change in circumstance. The Trustee will take all factors into account before making a decision as to whether to reduce, suspend, stop or infact increase your contribution. It may be depending on the circumstance that your Trust Deed period is extended or shortened or that you are able to suspend the payments until such time as your Income position improves.
The main differences between and IVA and Trust Deed are that one is an English Debt Relief process and the other is a Scottish debt relief process. An IVA can only be accessed by English and Welsh residents whereas Trust Deeds are only available for Scottish Residents. In an IVA you must have minimum unsecured debts of £15,000 whereas a Trust Deed is a minimum of £5000. The duration is also slightly different in that an IVA generally lasts for sixty months whereas a Trust Deed lasts for forty eight months.
I am a single mother of two children with a number of debts and loans, including some spiralling payday loans that are stressing me out. I have looked into debt management plans and trust deeds and it seems as though the trust deed is the best option but I’m not sure whether I can consolidate all my debts into one monthly payment? Can loans be included in this?
Our Scottish based team can help advise you on your debt problems.