PTD - Protected Trust Deeds & Sequestration | Scotland

What is a Protected Trust Deed?

A Protected Trust Deed, also referred to as a PTD, is a legally binding contract that enables Scottish residents to repay debts at a rate they can afford. Interest and charges are frozen and any debts included in the PTD that still exist at the end of the term (normally 3 years) will be written off.

For a Trust Deed to become Protected and interest and charges to be frozen one third or more of your creditors (by value) must not object to it.

Protected Trust Deeds are subject to creditor agreement, which is not always guaranteed. The PTD will be visible on your credit file and may affect your credit rating for up to 6 years. A PTD is a legally binding agreement and failure to co-operate with your Trustee may result in your Trustee presenting a petition for your Sequestration. The Trustee has an automatic interest in any assets you own, over the value of £1,000, including any equity which exists in your property.

Click here for more information on Protected Trust Deeds

Baines & Ernst provide Sequestration and Protected Trust Deed (PTD) Advisory Services. If you choose to proceed with a PTD or Sequestration, your case will be transferred to an Insolvency Practitioner of our choice for further review.

What is Sequestration?

Sequestration is the term used for Bankruptcy in Scotland.

If you cannot afford to repay creditors and are dealing with substantial amounts of debt, then Sequestration could be the most suitable debt solution for you.

However, Sequestration should be considered as a last resort due to the repercussions involved. For example, you could be required to sell your home and assets to raise funds to repay your creditors. You may find that your debt problems could be solved by entering into a Protected Trust Deed or a Debt Management Plan.

Advantages of Sequestration

Clear debts:	Although restrictions apply (see section below), Sequestration can free you from unsecured debts.
Protection:	Creditors are prevented from taking further action against you.
Duration:	You will normally be discharged after one year.
Peace of mind:	Sequestration is one of the most severe debt options available to people who are struggling to repay debts, however it can alleviate the stress associated to dealing with creditors. By removing this pressure, you can begin to concentrate on getting your finances back on track.

Sequestration: what you need to know

Fees:	If you’re petitioning for your own Sequestration, there is an application fee of £100, payable to the Accountant in Bankruptcy. In some cases you may have to make monthly contributions from your salary to repay your creditors, however this is dependent on your personal circumstances.
Restrictions:	Certain restrictions will be placed on you and you will lose control of your assets, this could include your property.
Credit rating:	Your credit rating will be adversely affected in the long term.
Obtaining credit:	You will find it difficult to secure credit in the future.
Debts:	Only unsecured debts (debts not secured against property or assets) can be included in a Sequestration application. Typical examples of unsecured debts are personal loans, store cards, credit cards, bank overdrafts and catalogue accounts.
Career:	You will no longer be allowed to hold certain public offices, government positions, be a member of a school board or act as a director of a limited company. In some circumstances your employment may be affected – you should check with your human resources department before applying for Sequestration.
Declaration:	You will have to declare that you have been sequestrated when opening a bank or building society account (if asked). If you have a bad credit rating, you will find it difficult to open an account. We recommend the Evolution Current Account as you do not need to complete a credit check to qualify and it gives you greater control over your finances.

For Sequestration advice, please call 0800 096 1331.

Key Information and Fees – PTD Service and Protected Trust Deeds (PTD)

We are committed to providing the very best customer service at competitive rates. Please Click here for more information on fees.

The PTD advisory service is provided with the highest level of care and attention; however we cannot guarantee the result of the PTD service or guarantee that your PTD proposal, as drafted by an Insolvency Practitioner of our choice, will be accepted by your creditors. For a Trust Deed to become protected and interest and charges to be frozen, one third or more of your creditors (by value) must agree to the proposal.

Although you may become debt free upon successful completion of the PTD, a record of the PTD will be held on your credit file for up to six years following completion. This will affect your credit rating and your ability to obtain credit in the future. Once a PTD is approved it is listed publicly on the Register of Insolvencies. Homeowners may be required to re-mortgage in the 3rd year and release available equity to pay off some or all of the debt.

You must continue to make payments in full towards any rent or mortgage, hire purchase agreements, loans secured against a property, council tax and utilities such as gas, electricity and water. However, the appointed Insolvency Practitioner will make suitable allowances for you to be able to afford your priority debts and your day-to-day living costs before calculating how much you can afford to pay towards your other creditors. Only unsecured debts included within the PTD may be written off at the end of the period and those not included, such as secured debts, Government fines and child support payments will still remain.

During the course of the Protected Trust Deed you will be required to obtain the approval of your Insolvency Practitioner should you wish to raise credit in excess of £250. You must also notify the party giving you credit that you have signed a Protected Trust Deed. You may encounter difficulty in obtaining credit at the end of the Protected Trust Deed but you will be in a much better position if you are able to demonstrate that you have co-operated with your Insolvency Practitioner and have successfully completed a PTD.

The period of the Protected Trust Deed may be extended to allow any missed payments to be paid. However, should you fail to co-operate with the Insolvency Practitioner as regards paying the agreed monthly contribution, it is likely that the Insolvency Practitioner will petition for your Sequestration.

In line with the Consumer Protection (Distance Selling) Regulations 2000, you will have a cooling off period of seven working days from the date the PTD Service commences, during which you may cancel in writing and receive a refund of the administration payment paid. Please note that a Protected Trust Deed is a legally binding arrangement and once approved, you will not be able to cancel. If a PTD fails, you will be liable for the balance of the debt and fees and this could lead to Sequestration.

We aim to provide a professional advisory service at all times. However, if you are unhappy with the service that you have received, please follow our complaints procedure explaining why you feel we have not met your expectations.

Using the Protected Trust Deed procedure is one of the most effective ways to manage your debt and return to a clean financial bill of health. For more advice on ‘what is a PTD’ and how it could help your debt problems – or for general queries and PTD information – contact Baines & Ernst today on 0800 096 1331† or complete the enquiry form on the right of the page.

A copy of our PTD Service Terms of Business can be viewed here.

Please contact us to discuss your situation in order that we can help ensure you have the right solution for your circumstances. You can also view a free publication from The Insolvency Service ‘In Debt? Dealing With Your Creditors’ which provides an overview of some of the debt solutions that may be available. There is also a free publication from the Accountants in Bankruptcy for those who reside in Scotland ‘Debt and the Consequences’

We are committed to providing the very best customer service at competitive rates. View our fees section for more information.