A Protected Trust Deed (PTD) is a debt solution available in Scotland, which puts in place a legally binding agreement between a person and their creditors, administered by a Trustee. Available for a standard duration of 4 years, a PTD can also be used over a longer period in certain circumstances.
The goal of a PTD is to set a payment plan for debts of over £5000, after which any remaining debt is usually written off by creditors. It is only available for Scotland residents, and can only be put in place through a licensed Insolvency Practitioner. This Insolvency Practitioner will then work as the Trustee.
Although a voluntary and mutually consensual agreement, you will be bound by its terms once it is established. However, once the Trust Deed has received the support of your creditors and becomes ‘protected’. This means that your creditors are also bound by it and cannot pursue other means to recover debts from you.
To establish a PTD, you must have assets, which are then given to your Trustee to administer your financial affairs and to pay back as much of your debt as possible. This may involve the sale of some of your assets.
If a Trust Deed does not become ‘protected’, your creditors will still have the right to take action to recover your debts.
To find out more about PTD Deeds and explore your eligibility, contact one of our experienced advisors today.
Who is eligible for a Protected Trust Deed?
To enter a Trust Deed, you must be a resident of Scotland. As a debt solution that requires the agreement of your creditors, you must also be able to make regular payments over the term of the agreement. It is also defined by your level of debt – meaning that it is only available for debts which exceed £5000 – and your assets. Assets such as property, a vehicle or savings and investments are necessary in order to enter a PTD.
Individuals meeting these criteria stand a good chance of success if they attempt a PTD, and our dedicated team members are on hand to support you in taking control of your unaffordable debts.
Why choose a Protected Trust Deed?
There are many advantages to a PTD, from the relief you can get from demanding communications from creditors to the prospect of debts being written off at the end of the term.
An end to creditor pressure
The Trustee will take on the role of handling correspondence with your creditors, who will no longer be able to pursue you directly for the recovery of loans.
No enforcement action
The Accountant in Bankruptcy has the power to stop creditors taking action to recover money from you, and you may apply to them for such relief when setting up the Trust Deed.
Disadvantages of a Trust Deed
Your credit rating will be adversely impacted.
If approved, your Trust Deed will appear on a public register of insolvencies.
Any asset that has lending secured against it (think of a mortgage on a house or vehicle finance) that you do not want to be repossessed has to have the ongoing payments maintained, so a Trust Deed is not a form of debt relief from secured lending.
Magistrate’s Court fines, court orders under matrimonial and family proceedings, etc. still need to be paid. An Trust Deed is not going to provide you with debt relief from these.
Approved Trust Deed Subsequently Fails
An Trust Deed is not as flexible as the informal debt solutions. If you fail to keep one of the promises you make (for example, by missing promised monthly payments, or not returning annual Income & Expenditure Review items) then your Trust Deed risks failing. If your Trust Deed fails, you may still face bankruptcy proceedings.
Income & Expenditure Review
Every year, you will be expected to carry out a review of your Income & Expenditure. This often means that you have restrictions on your personal expenditure.
This is only available for people living in England, Wales and Northern Ireland.
You may still seek credit
During a PTD you are not barred from obtaining credit, such as a mortgage or credit card, though you should be aware that in practice this may still be difficult due to your credit score.
Debts may be written off
At the end of the 4-year term of the PTD, you are officially discharged from its terms. At this point, if you have abided by the terms of the repayments, any remaining debts are written off.
Your employment or duties will be unaffected
Bankruptcy (or Sequestration in Scotland) bars individuals from certain forms of employment or public office, but with a PTD this is not the case.
Is a Protected Trust Deed my only option?
Although PTDs have a track record of leading individuals to life after debt, there are other options which may suit your circumstances better. Our advisors have a wealth of experience in providing the information you can trust, and support you in seeking the best solution. They will also inform you about other solutions, such as:
Debt Arrangement Schemes (DAS)
If you have the means to pay off your debt in less than 4 years, without entering a PTD, then a DAS may be available to you.
If you are unable to pay your debts, amounting to more than £3000, then you may require Sequestration. This process is similar to bankruptcy and may be used when your disposable income or assets are insufficient to repay what you owe.
How do I use a Protected Trust Deed?
Before applying for a PTD, our advisors will check your availability and that you understand the other available debt solutions. If you wish to pursue a PTD, they will work with you and your creditors to put the formal agreement in place, making the Trust Deed ‘protected’. At this point, you will be ready to start making payments each month, totaling 48 monthly payments over four years.
Our team members are committed to supporting you on your path to a successful debt solution. Whether by using a PTD or another financial recovery method, we will support you along the way, offering impartial advice and giving your space and information to make the best decision for you, your family and circumstances.