What is a Scottish Protected Trust Deed (PTD)?
Find out more about a Protected Trust Deed, who it is for, who it is not for, what it does the pros and cons
A Protected Trust Deed in Scotland, or PTD, is a form of insolvency, and it can be a good way of repaying your debts at a rate that you can afford. A Protected Trust Deed shows your creditors that you’re insolvent. In other words, you can’t repay your debts in a reasonable amount of time, but there’s no expectation that you’ll have to sell your home, and you might not have to sell any of your assets or items of value, such as a car if you have one. To be eligible for a Protected Trust Deed, you need to show that you don’t have enough money to pay your normal monthly debt repayments and that the amount of debt that you have is more than any assets and equity you have in your home. Instead, once you’re in a Protected Trust Deed, you’ll make monthly payments for most commonly four years.
You can find out more about a Protected Trust Deed by contacting us and speaking with the team. For a Trust Deed to become a Protected Trust Deed, the majority of your creditors need to agree to the proposal. This works on a value basis. So, for example, if you owe 50% of your debt to one creditor, then their share of the vote is 50%.
Protected Trust Deeds are only available in Scotland. If you live in England, Wales or Northern Ireland, we’d suggest looking at some of the alternative options, including some solutions that are specific to people living in England, Wales or Northern Ireland. So, let’s go through some of the benefits and risks of a standard Protected Trust Deed. When it’s approved, a Trust Deed gives you protection from your creditors. They’ll stop contacting you, and they won’t add any more interest or charges to any debts that are included in it.
At the end of the Protected Trust Deed, any money left to pay on the debts included in your Protected Trust Deed will be written off as long as you’ve made the payments that you agreed to. So hopefully that sounds good. However, it’s important for you to understand the risks that you’ll need to consider before taking out a Trust Deed. Protected Trust Deeds are a form of insolvency. They’re legally binding and they must be arranged through an insolvency practitioner.
The budget you agree with your insolvency practitioner should be affordable for the full term of the Protected Trust Deed, We understand life can change throughout four years but certainly, at the beginning, you need to ensure you don’t know of anything affecting your budget from the start. However, if your financial circumstances change, the Protected Trust Deed can be adapted. If you go in a Protected Trust Deed, a reference to it will be added to your credit file. This will stay on your record for six years and will make it more difficult for you to get further credit during your Protected Trust Deed, the plan will allow you to take up to £500 credit whilst you are in the plan.
This is important to remember as if you do breach this, your Protected Trust Deed could be cancelled. It also applies to borrowing money from family and friends. Additionally, your name will be added to the Register of Insolvencies in Scotland. This can be read online if someone looks for it, but it’s unlikely that you would stumble across it, and it won’t appear in online search results for your name.
If you’re a homeowner, you may also need to extend your Trust Deed to factor in further costs for your creditors to ignore the equity in your property.
There is a risk that if your Protected Trust Deed fails for any reason, you could be made bankrupt. There are also fees involved with setting up a Protected Trust Deed. These are included in the amount that you pay.
This means that there aren’t any upfront costs, and if your Trust Deed isn’t Protected, then you won’t have to pay any fees at all. And finally, it’s very important to get expert debt advice to make sure that a Protected Trust Deed is suitable for you and your individual circumstances. We offer free debt advice both online and over the phone. We’ll help you put together a realistic budget and then recommend the most suitable debt solution for you. If a Protected Trust Deed is a solution that’s appropriate for your situation, we’ll set it up for you and be here to support you every step of the way.
Ready to get advice on a Protected Trust Deed?
Your Expert Group, scottishtrustdeed.help, River Insolvency, ivahelper.co.uk are trading names of YEG Insolvency Limited which is Authorised Representative (FCA Number 987650) of Secure Financial Management Limited which is regulated by the Financial Conduct Authority.
Free and impartial help with money – MoneyHelper.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected.
Secure Financial Management Limited’s FCA number is 550186. You can confirm this by checking the financial services register by visiting the FCA website www.FCA.org.uk?register or by contacting the FCA on 0800 111 6768. The registered office is 89 West Regent Street, Glasgow, G2 2BA. Registered in Scotland company no: SC393839. Registered with the ICO under the Data Protection Number ZA328512
Donna Forey is Licensed to Act as an Insolvency Practitioner in the United Kingdom by the Institute of Chartered Accountants of Scotland.
A formal debt solution may not be suitable in all circumstances. Fees apply. Your credit rating may be affected.
*Debt examples are subject to creditor acceptance, payments are subject to individual circumstances, credit may be affected. Fees may apply.