Trust Deeds

What is a Protected Trust Deed?

A Protected Trust Deed or PTD is a legally binding contract between a debtor and their creditors, supervised by a Licensed Insolvency Practitioner. The purpose of the PTD is to enable you to reach a compromise with your creditors and avoid the consequences of sequestration.

England & Wales: see IVA's

Is a Protected Trust Deed right for me?

A Protected Trust Deed is available to all individuals, Sole Traders and Partners (domicile in Scotland) who are insolvent and are experiencing creditor pressure. It can be used by those who own their own property and wish to avoid the possibility of losing it in the event they were made bankrupt. You do not have to own a house to sign a Protected Trust Deed.

For a Protected Trust Deed to succeed you need to be control of your spending. Whilst in a Protected Trust Deed you will be unable to get credit therefore you must live within your means. Use our SOA to help you gain control of your finances.

Protected Trust Deeds - Pros v Cons

Pros
• Debt free in 3 years.
• Interest and charges are frozen.
• Monthly payment is based on what you can afford.
• No direct fees to be paid by you but be warned some companies may charge you an upfront fee.
• No more creditor contact throughout the term of the arrangement.
• Avoid all of the unfavourable stigma and restrictions of bankruptcy.
• Legal action and collection action will stop.
• Compels you to address your financial management issues.
• Removal of the temptation to get further into debt.

Cons
• In order for the Protected Trust Deed to be agreed, you require a third in value of the unsecured creditors to approve the arrangement.
• Your home and assets may still be at risk if the creditors decide not to exclude them.
• You may find getting credit in the future more expensive. Creditors will assess your risk level based on your financial history.
• You will not be able to use your store or credit cards. These will be cut up.
• You will normally not be allowed to borrow any more money until you have successfully completed your arrangement. It may however be possible to change an existing mortgage or take a new one while you are in a Protected Trust Deed.
• If the Protected Trust Deed fails as a consequence of you not meeting your obligations under it, it likely that you will be sequestrated (bankrupt).

Who regulates Protetced Trust Deeds?

Only insolvency practitioners (IP's) are allowed to act as trustees. The Accountant in Bankruptcy oversees the activities of IP's. If you wish to make any complaints about an IP then contact their recognised professional body.

Alternatives to trust deeds

Sequestration (bankruptcy) or debt management.

How to apply for a trust deed?

Contact an Insolvency Practitioner in Scotland.

How long does it take to set up a Trust Deed?

Typically it takes 2-3 months for the trust deed to be protected.

What happens to my credit rating?

Credit rating will be severely impacted for a period of at least 3 years. During this time, you will have NO access to credit of any kind, 3 years whilst on the plan and then for a further year, as it usually takes this period to build your credit rating backup. This is a good thing as you are forced into living within your means, balancing what you spend with what you earn.

Protected Trust Deed Fees - Who and how much?

Who?

Only an insolvency practitioner can arrange a Protected Trust Deed (PTD). Shop about to find an insolvency practitioner your happy to deal with.

How much?

Most insolvency practitioners do not charge a fee for setting up an trust deed. What they do is agree with creditors a fee to be taken from the funds paid into the PTD. This may impact on the eventual dividend to be returned to the creditors which may effect the creditor's acceptance criteria. If this is the case it is worth negotiating with the IP to draw a smaller fee.

Take control of your debt

Complete our SOA and get your finances back in control. Once you complete your SOA you'll find that you understand where the solution lies to your financial problems.

And remember - our debt forum is here to offer you help and advice whenever you need it.

Don't let your debts drive you down the highway of despair - take back the controls and get on the road to financial happiness.