Some Firms Fail 74% of Protected Trust Deed Cases Closed This YearSeptember 18, 2017
Earlier this year, we wrote about the worrying figures reported by a number of large insolvency firms who had failed a huge percentage of the Protected Trust Deeds (PTDs) they closed in 2015-16. During that period, one firm’s failure rate stood at 88 percent.
New figures from the Account in Bankruptcy for 2016-17 show those same firms have once again failed a huge percentage of the PTDs they closed. This year, the worst failure rate was 74%.
Considering that the industry average for both years is approximately 15%, there is a huge discrepancy between poorly performing firms and the industry average. Worryingly, this discrepancy has now been replicated two years in a row.
What is a Protected Trust Deed?
A PTD is a statutory debt relief/insolvency instrument. It's an agreement between you and your creditors for you to make affordable monthly payments and contribute any of the equity in your assets (such as your home) towards your debt over a set period, which is normally four years.
At the end of the agreed period, any remaining debts are written off as long as your PTD hasn’t failed.
What does a failed Protected Trust Deed mean?
It’s easy to get lost in statistics and forget to think about what they represent. So, what does the AiB mean when they talk about a successful or failed PTD?
When a PTD is closed/finished, a successful one means all your debts are written off. A failed PTD means your debts are not written off despite possibly having paid your contribution for years.
Sadly, when a PTD fails, people will often end up in a far worse financial position than they were at the start. Individuals can end up with more debt than they originally had as creditors can apply interest and charges.
How do firms compare?
All insolvency firms will sell you the same promise: making manageable monthly repayments and having your debt written off after a set period.
The difference is how likely they are to get you from start to the end.
Below we have compared our PTD failure rate (1%) to the industry average and two large firms. As you will see, there is a huge disparity in the failure rates.
We are tremendously proud of our consistently low PTD failure rate, which is well below the industry average. Debt-laden individuals who choose to work with us may be ten times more likely to reach the end of the PTD period than with the average firm.
Unfortunately, although the PTD failure rate figures are publicly available, hardly anyone thinks to dig through the AiB’s research to find them. This can result in individuals selecting a firm that is unlikely to get them to the end of their PTD.
How should I select an insolvency firm?
Choosing the wrong insolvency firm can have a huge impact on the chances of success of your PTD. So, how can you sort the wheat from the chaff and select a firm that will support you throughout your PTD?
Where a firm appears in your Google search is more a reflection of their marketing spend and website development skills rather than their ability to successfully get you to the end of your PTD.
Here are some helpful tips when deciding which firm to go with.
- Ask the person you are speaking to what their PTD failure rate is
- Check their failure rate in the AiB report (page 100)
- If it is high, ask the firm to explain it and decide whether you like their answer
- Ask the person you are speaking to who your trustee will be and which firm the trustee works for so you can check the failure rate
- Work out whether the firm you are talking to will be the one actually doing your insolvency and decide if you are happy with the answer
You need to carefully evaluate all available firms and select the one that’s most likely to get you from the start to the end of the PTD.
If you would like to discuss your options, our debt experts are waiting to help you. Please call our office for free, confidential advice.