What is a Protected Trust Deed?
A Protected Trust Deed (PTD) is a formal fixed term debt solution for people living in Scotland that acts as an alternative debt solution to bankruptcy.
How Does It Work?
A PTD removes the legal obligation to maintain contractual payments to your existing unsecured debts, by replacing them with a single payment based on affordability.
The new payments are paid for a pre-agreed fixed term of, usually, 48 months. Payments are made to a Trustee, the name of the official who administers the PTD arrangement. Their job is to make sure all parties adhere to the PTD's terms and conditions.
Whilst the PTD is in force, all named unsecured creditors forfeit the right to take legal action for the recovery of the debt and they are also legally obliged to stop interest charges or late payments, fines or penalties.
When the fixed term has completed successfully, the arrangement is considered satisfied and all outstanding balances left unpaid by the monthly contributions are legally written-off, leaving the applicant debt free
Qualifying criteria
In order to qualify for a PTD you must be insolvent. This means that your assets must have a lower value than your liabilities.
There is a minimum debt level requirement of £5,000 which should be owed to 2 or more different creditors
A PTD is available to all Scottish residents, including homeowners, lodgers or tenants, and people living with family.
Your assets
Under the terms of the arrangement, ownership of any assets, including equity in your property, must be transferred to the Trustee for evaluation.
You will be given the opportunity to buy the Trustee's interest in any assets you transfer, by using 3rd party money or possibly by extending the duration of your arrangement. But if no agreement can be found, the Trustee has the power to sell the assets for the benefit of your creditors.
Ownership of a vehicle with a value less than £4,000 is normally agreeable, but vehicles with a value greater than this might cause issues.
Any other none essential assets such as second homes, or monetary investments would also be taken into account as part of the arrangement.
Protection
As part of the initial set-up process, the Trustee will advertise the Trust Deed as one of the legal requirements of the process.
This notification gives creditors a defined period of 5 weeks within which to register their rejection of the deed.
Each creditor has the same chance to voice their disapproval, although the strength of the rejection will be proportionate with the percentage debt that a creditor is owed.
For the Trust Deed to reach 'Protected' status, and therefore become legally binding on all parties, there must be no more than 33% of creditors, in debt value terms, that reject the proposed Trust Deed. Any creditor that doesn't vote will be deemed to have accepted it.
Alternatively, if more than half the actual number of creditors reject the Trust Deed, then it will also fail to become protected.
In reality, very few Trust Deeds fail to reach Protected status, as creditors recognise that a PTD generally offers a better return than bankruptcy.
Apply For A Protected Trust Deed
If you would like to discuss the PTD solution with a professional adviser, call our helpline on 0800 088 7502.
Alternatively, complete the form below and one of advisers will call you at your preferred time.
