Protected Trust Deed FAQs
Here you’ll find the answers to the most frequently asked Protected Trust Deed questions. If you can’t find the answer to your query here, please don’t hesitate to call us.
A Protected Trust Deed is a solution that’s designed to help people living in Scotland repay their debts at a rate they can afford. It is a legally binding agreement between you and your lenders and providing you keep to the terms of the Deed, lenders will agree to write off any remaining debts that still exist at the end of the Deed period, which typically lasts for 4 years.
Interest and charges will be frozen and lenders will no longer be able to contact you or petition for your Sequestration (Bankruptcy).
In our many years of experience, lenders welcome a responsible repayment plan with lower payments based on what you can realistically afford. With a Protected Trust Deed, lenders understand that they will recoup much more of the debt than if you were to apply for Sequestration. PTDs offer lenders legal protection and the reassurance that they will receive a proportion of the debt owed to them; so they are likely to look upon a Deed more favourably.
Protected Trust Deeds are subject to lender agreement, which is not always guaranteed – so it is entirely up to the lender as to whether they want to enter into a PTD. For a Deed to become protected and interest and charges to be frozen, one third or more of your lenders (by value) must agree to the proposal.
If you want to go ahead with a Protected Trust Deed, a financial review will be carried out to ensure it is the right solution for you and to get more details regarding your income, household expenditure and monthly debt repayments. Your case will then be transferred to an Insolvency Practitioner for further assessment and will draft a repayment proposal based on this information.
Once you have signed and returned the Protected Trust Deed, the Insolvency Practitioner will advertise the PTD in the Edinburgh Gazette and write to all of your lenders.
Your lenders have 5 weeks from the publication in the Gazette to object to the proposal set out by your Insolvency Practitioner.
Protected Trust Deeds are subject to creditor approval, so for a Deed to become protected; repayments reduced and interest and charges to be frozen, one third or more of your lenders (by value) must agree to the proposal.
The overall set up time can take up to 8 weeks, but your Insolvency Practitioner will give you a clearer overview once they have all the information they need from you.
Most last for 4 years; however this depends on your financial and personal circumstances. For information on your specific circumstances, speak to one of our professional advisors.
If you’re struggling to repay debts, a Protected Trust Deed could help you lower repayments, freeze interest and charges and write off a proportion of debt that could help you become free from unsecured debts in 4 years.
How a Protected Trust Deed will help you..
- Affordable monthly repayments will be based on what you can realistically afford
- You will be granted protection from lenders taking court action
- Interest and charges on debts will be frozen so debts will not increase
- Unsecured debts will be written off at the end of the term providing you keep to the terms of the deed
- You could become debt free usually at the end of 48 months
It’s important that you know the following before starting a Protected Trust Deed…
- Protected Trust Deeds are only available to people living in Scotland
- Protected Trust Deeds are legally binding therefore once the PTD has started, it cannot be cancelled. Failure to keep to the Deed could result in Sequestration.
- Only unsecured debts – that’s debts not secured against your property like store cards, personal loans, payday loans, credit cards, overdrafts and catalogue accounts – can be included in a Protected Trust Deed.
- If you are a homeowner, you may have to release equity from your home in the final year of the Deed to help repay your lenders. This will depend on your personal circumstances and will be discussed with you before you start the Protected Trust Deed.
- Your credit rating will be affected for six years from the start of the Protected Trust Deed.
Mortgage repayments will be accounted for when you arrange the deed so will still be expected to continue to make your normal mortgage repayments. A secured lender (e.g. the Bank or Building Society which holds the mortgage) is not bound by the Protected Trust Deed and retains its normal rights.
Your Insolvency Practitioner may request that you release equity from your property to repay lenders. However, this depends on your situation. A valuation of the property will be carried out and the level of any outstanding mortgage or secured loans established.
If the car is needed for work purposes, in most cases you will be allowed to keep it for the duration of the Deed. You may be asked to trade the car in for a less expensive model if the Insolvency Practitioner deems the vehicle to be too expensive. Hire purchase car loans will not be included in the PTD and you will be expected to make the monthly repayments in full on this type of secured loan.
The Protected Trust Deed typically lasts for a period of 4 years. Any debts that still exist at the end of the term will be written off – providing you have kept to the terms of the Deed. This means you will be free from unsecured debts included in the Deed.
After you have signed the Protected Trust Deed, it is necessary for the Insolvency Practitioner to write to all of your lenders. Once a Protected Trust Deed is approved, it is listed on the Register of Insolvencies. It is recommended that you notify your family or partner before the PTD becomes public.
Getting in touch with us is easy – simply call us on the number at the top of the screen or complete the enquiry form and a member of our team will call you back.
If you are an existing customer and would like the Baines & Ernst customer services number, please visit our contact us page.