Who pays the fees for my Protected Trust Deed

“Insolvency Practitioners do charge fees for a Protected Trust Deed”, This statement is true in all cases, of that there is no doubt.

But who pays the fees for the Protected Trust Deed that the Insolvency Practitioner charges?

Well, the answer to this question depends on which side of the fence you stand. Some people would say the Trust Deed applicant pays the fees, whereas others would say the creditors pay the fees. Let me explain a little more clearly.

The fees for a Protected Trust Deed are charged by the Insolvency Practitioner acting as the Trustee in the Trust Deed, and the fees cover the costs of the work carried out during the initial preparatory period and the subsequent 3 years administration and supervision of the Protected Trust Deed.

The level of the fees for the Protected Trust Deed, and when they can be taken, is laid out in the terms of the Trust Deed and these terms must be agreed by the creditors before the Trust Deed can be considered Protected.

By allowing the Trust Deed to become Protected, the creditors agree to allow the Insolvency Practitioner to draw his fees from the money the Trust Deed applicant will to pay into the Trust Deed through their monthly contributions.

So, from this statement it is clear the Trust Deed applicant pays the costs – or is it.

If the Trust Deed applicant is only going to repay a small proportion of their debt, with the remainder being legally written off at the end of the Protected Trust Deed, and the creditors are allowing the fees to be taken from what has been paid in already – without asking for extra payments to be made to cover the fees, then in actual fact it is the creditors who are having to stand the costs of the Protected Trust Deed, and they do this by accepting a reduced share of the collected Trust Deed fund when the Trust Deed funds are disbursed.

One exception to this logic would be if a Trust Deed applicant found themselves in the unusual position of being able to repay the whole of their original debt whilst still within the Protected Trust Deed. This could possibly be due to a fortuitous ‘windfall‘, such as an inheritance or a lottery win, or could be due to a less fortuitous circumstance, such as a redundancy payment or an insurance payout.

In any of these circumstances the onus of paying the fees changes. Typically, the whole original debt would need to be repaid through the Trust Deed, and the Insolvency Practitioner’s fees would need to be paid on top by the applicant.

If you would like to discuss any of the fee issues raise here, but in more detail, we invite you to call our Trust Deed Helpline on 0800 088 7503 where one of our specialist Trust Deed advisers is waiting to take your call.