Protected Trust Deed
The Protected Trust Deed, or PTD, is a formidable weapon in the arsenal against personal debt in Scotland.
Introduced under the Bankruptcy (Scotland) Act 1985, amended in April 2008, and most recently forming part of the Bankruptcy (Scotland) Act 2016, a PTD acts as a formal alternative to bankruptcy for those people living in Scotland.
PTD Qualifying Criteria
There is a minimum debt level of £5,000.
A PTD applicant can be self-employed or employed and a PTD is available to homeowners, tenants and lodgers. Even people living with family or friends can apply.
The payments into a PTD are based on affordability, but there's a minimum payment ratio that must be met if the PTD application is to be successful. Essentially, the more you owe, the more you'll be expected to repay.
Protected Trust Deed advantages
A PTD is designed to help people living in Scotland regain control over their unsecured debt problems whilst avoiding bankruptcy or, as it is also know in Scotland, sequestration.
Based on a structure of affordable repayments paid over a fixed period of usually 4 years, a Trust Deed gives the applicant the chance to prioritise their essential living costs over the cost of their debt repayments.
The PTD guarantees to freeze all interest and stop any late payment charges on all the debts included in the arrangement, whilst stopping any legal action being taken against the applicant for the recovery of the debt.
After completion of the PTD's fixed repayment period, the arrangement completes and any outstanding balances are written-off.
Whilst payments into a PTD are based on what's affordable in each individual case and, therefore, each case being unique, it's not unusual to see cases where 70% of the original debt is written-off.
Protected Trust Deed disadvantages
A PTD will have an impact on the applicant's credit rating for a period of 6 years and their name will be included on the Register of Insolvencies.
The Bankruptcy (Scotland) Act 2016 states that a Protected Trust Deed must be administered by a licensed Insolvency Practitioner (IP) and, when appointed, the IP takes on the role of the Trustee.
It's the Trustee's job to make sure as much debt as possible is recovered to the creditors, which puts the Trustee in a very powerful position.
The Trustee has the power to commence bankruptcy action if they feel the debtor is being uncooperative or non-compliant with regard to the recovery of personal assets or payment of contributions.
Professional opinion
Deciding to enter a PTD is a serious decision. It is a very powerful solution and has the capacity to deal with all levels of debt, but it's impact on the applicant's assets and credit rating shouldn't be underestimated.
Whilst there are many advantages to the PTD, there are some serious disadvantages, too. So it make sense to have a chat with a professional PTD specialist before you make a commitment to this solution.
For more information on the Protected Trust Deed solution please read -
Professional Protected Trust Deed Advice
If you would like to have a chat with us about how a PTD might help you, please call 0800 088 7502.
Any advice will be free and confidential.
