What if I can't pay my Protected Trust Deed payment?

It's not unusual for people to experience payment difficulties during their Protected Trust Deed (PTD).

Life has a habit of changing all around us. Sometimes the changes are insignificant and other times they're devastating. All we can do is try to navigate our way around as best as we can whilst trying to avoid the pitfalls that are all around us.

When Problems Strike

The first thing to remember is not to panic.

There are several option available your Trustee in the event that you're struggling to afford your PTD payments, but which option the Trustee will choose will be determined by the nature of the problem.

Short term problems

If you're experiencing short term problems, such as a temporary drop in income, or an unexpected short term increase in your expenditure, then you should notify your Trustee straight away.

Your Trustee has the discretion to be able to reduce your payments whilst you're struggling to make ends meet. Once the problem has passed, you'll be expected to increase your payments back to the previously agreed level.

Longer term problems

Problems like this would typically be experienced as a result of the higher household costs, perhaps like those associated with the arrival of a new baby or as a result of a permanent drop in income.

Your trustee can, at their sole discretion, reduce your PTD payment permanently for the remaining duration of your trust deed.

Depending on the size of the change you've experienced, it may be necessary for your Trustee to extend the term of your PTD slightly. But your Trustee will consider this as part of their remedy.

complete loss of affordability

In the event you suffer a complete loss of affordability, you'll need to discuss your options with your Trustee.

Obviously, your circumstances will have a significant bearing on the solutions they may suggest, but it is possible they may suspend the PTD payments for the remainder of the arrangement.

Failure of your trust deed

In the event that you can't make payments into your arrangement and the prospect of you being able to do so in the foreseeable future look remote, it is possible that your PTD will fail.

At the point of failure, you will once again be responsible for the liabilities that were included in the arrangement.

The outstanding balances will be adjusted to reflect the value of funds received by creditors during the arrangement. However, this may not amount to much as, usually, a sizeable amount of the money paid in to the arrangement will be drawn as fees by the Trustee.

Once you are back in control of your debt, you have a choice. You can try to negotiate with your creditors to give you some leeway whilst you try to reestablish a means of payment or, alternatively, you could opt for bankruptcy.

Summary

If you're experiencing payment troubles during your PTD you should immediately inform your Trustee.

They have the discretion to reduce your payments or suspend them if there's a reasonable prospect of you recovering your situation.

They are best placed to advise you on your arrangement, and will be keen to ensure it has the strongest chance of survival.

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