PTD Information

What is a Protected Trust Deed?

Protected Trust Deed explained

Protected Trust Deeds are available to people living in Scotland who have been struggling to repay substantial amounts of debt but want to avoid Sequestration. PTDs are legally binding contracts that enable people to repay debts at a rate they can afford, however they are subject to creditor agreement, which is not always guaranteed.

If creditors agree to the terms of the PTD, they are legally obliged to freeze interest and charges and write off any remaining debts included in the deed at the end of the term, which is normally 3 years.

Advantages of a Protected Trust Deed

Affordable repayments:	Repayments are tailored to your current financial circumstances to ensure they are as affordable as possible.
Debts written off:	Any unsecured debts included in the Protected Trust Deed that you cannot afford to repay will be written off at the end of the term.
Protection:	Creditors cannot take court action for full settlement of outstanding debts once your Trust Deed becomes protected.
Formal agreement:	Creditors are required to freeze all interest and charges and cannot apply changes to Protected Trust Deed repayments.
Creditor letters:	We handle creditor letters and phone calls.
Fixed term agreement:	The agreement is fixed for a period of usually 3 years. When the term is complete, you will be free from the unsecured debts included in the Protected Trust Deed.

Protected Trust Deed: what you need to know

Legally binding:	Failure to keep to the terms and conditions of the Protected Trust Deed could lead to repercussions including Sequestration (Bankruptcy).
Obtaining credit:	Once the Protected Trust Deed begins, you will not be allowed to take out further credit agreements including loans and credit cards.
Property:	If you are a homeowner, you may be asked to release equity from your property to repay creditors. This depends on your personal circumstances.
Credit rating:	Your credit rating will be affected for 6 years after completion.
Debts:	Only unsecured debts can be included in a Protected Trust Deed. For example: personal loans, store cards, credit cards, bank overdrafts and catalogue accounts.
Creditor agreement:	A Protected Trust Deed is subject to creditor agreement, which is not always guaranteed.

When a Trust Deed becomes protected

A Trust Deed basically refers to the service in the initial stages – before creditors agree to the terms of the deed.

During this stage, your case will be transferred to an Insolvency Practitioner for further review. The Insolvency Practitioner will be responsible for creating the proposed arrangements of the deed and negotiating affordable repayment rates with your creditors.

Providing creditors holding one third or more of the value of your debts agree to the terms of the deed, it will become protected and you can begin repaying your creditors at a rate you can afford without the worry of court action, demanding creditor letters and phone calls, or interest and charges.

Providing you keep to the terms of the agreement and cooperate fully with your appointed Insolvency Practitioner, you can expect to become free from unsecured debts usually at the end of 3 years. Any debts included in the PTD that still exist at the end of the term will be written off.

PTD payments

To ensure your repayment rate is as affordable as possible, your appointed Insolvency Practitioner will take into account your current income and outgoings. This guarantees that you will have enough money to pay for essential bills and day-to-day living costs. PTDs can help alleviate stress associated with debt, that’s why repayments are based on your individual situation; not on a pre-arranged rate.

It is not uncommon that your Insolvency Practitioner will request that you sell assets or release equity from your home to repay your creditors if you own a property. However, this depends on your individual circumstances and will be fully discussed with you before the terms of the PTD are finalised.

Creditors attitude to Protected Trust Deeds

A Protected Trust Deed will normally produce a better outcome for your creditors than if you were to proceed with a Sequestration. This is because a PTD offers protection to creditors – guaranteeing that a proportion of the debt owed will be repaid. They also have the peace of mind knowing that the Protected Trust Deed is being administered by a suitably qualified professional. Therefore, creditors often look upon PTDs favourably.

For Protected Trust Deed Advice, contact us today.

Insolvency Practitioner will take into account your current income and outgoings. This guarantees that you will have enough money to pay for essential bills and day-to-day living costs. PTDs can help alleviate stress associated with debt, that’s why repayments are based on your individual situation; not on a pre-arranged rate.