Protected Trust Deeds
Every year thousands of Scottish residents use Protected Trust Deeds to get their problem debt back under control.
Check if you QualifyMay not be suitable in all circumstances. Fees apply. Your credit rating may be affected.
Free debt counselling, debt adjusting and providing of credit information services is available to customers by contacting MoneyHelper.
What is a Protected Trust Deed?
Protected Trust Deeds are a formal insolvency procedure, available only in Scotland.
A Protected Trust Deed is a legally binding agreement between an individual and a licensed Insolvency Practitioner (the IP, who acts as the Trustee) and is for the benefit of all unsecured creditors.
Protected Trust Deeds offer a viable alternative to other forms of debt relief such as the Debt Arrangement Scheme (DAS) or Sequestration (Scottish term for bankruptcy).
Trust Deeds work by transferring your assets to the Trustee and by you making a single, affordable monthly payment from your income for a minimum period of 48 months.
The unsecured creditors receive payment from the funds received into the Protected Trust Deed and will write off their remaining debt at the end of the Trust Deed period. Please continue to read this section to find out if Trust Deeds sound like they could be the right solution for you.
When you enter into a Protected Trust Deed. your creditor contact will be reduced and once the term of the Protected Trust Deed has been successfully complete, the remaining balance of your unsecured debts will be legally written off.
Your creditors will not pursue you for the written-off amounts, meaning you can look forward to a brighter future.
Unsecured Debt
Personal Loan
£10,000
Credit Cards
£6,000
Store Cards
£1,600
Council Tax Arrears
£1,200
Total Owed £18,800
Customer repayments*
Before
£450
(TOTAL CONTRACTUAL REPAYMENTS)
After
£175
(TOTAL CONTRACTUAL REPAYMENTS)
Reduced by
61%
* Subject to creditor acceptance. Payment subject to individual circumstances. Credit rating may be affected
How does a Protected Trust Deed work?
The qualifying criteria to enter into a Protected Trust Deed is as follows:
- You currently live in or have lived in Scotland within the last 12 months, or have a place of business in Scotland.
- You have unsecured debts of £5,000 or more.
- You can pay a contribution from income and/or have assets that will enable a return to be made to creditors.
- You are insolvent i.e. you are unable to pay your debts as they fall due and/or your liabilities are greater than your assets.
If you qualify and decide that the Protected Trust Deed is the right solution for you, then you will sign all the relevant paperwork and your Trustee will attempt to have the Trust Deed protected.
By obtaining protected status, this means that your creditors cannot take legal action against you for recovery of their debts.
To achieve protected status, the Trustee must not receive objections from a majority in number of creditors or from any creditor(s) owed more than one third in value of the total debt.
Once protected, the Trustee’s main duty is to collect your income contributions, realise your assets and make the agreed payment to your creditors. Your agreed contribution is subject to review at least annually, or at any time if you experience a change in circumstances.
At the end of the agreed payment period (typically 48-60 months), your Trustee will make the final payment to your creditors and process your discharge. Once discharged, your remaining debts are legally written off and your Protected Trust Deed is complete!
Every year thousands of Scottish people enter into a Protected Trust Deeds to get back in control of their debts.
Advantages of a Protected Trust Deed
- You are protected from legal action from creditors
- One, affordable monthly payment, allowing for all general living expenses & household bills
- Creditor contact will stop – your Trustee will liaise with your creditors, taking away the pressure of constant phone calls and distressing mail
- Interest, fees and charges are frozen from the date your Protected Trust Deed is signed
- A Protected Trust Deed does not involve court proceedings
- Your home and other assets can be retained, subject to value and circumstances – do no delay in taking advice if you have assets that you wish to protect
- If you are facing legal action, need help quickly and have chosen a Trust Deed as your debt solution then the Trust Deed can be signed immediately
- An earnings arrestment will cease to have effect on protection of the Trust Deed
- After successfully completing a Trust Deed, you will be discharged from all remaining debts and the balances will be written off.
Disadvantages of a Protected Trust Deed
- Your credit rating may be adversely affected
- Creditors may object to the Trust Deed proposal in sufficient number or value, causing it to fail to achieve protected status
- Granting a Trust Deed may result in you being refused credit, before or after your discharge is granted
- You may not be able to act as a Director of a limited company, unless the company’s articles of association allow you to do so
- Student loans are not discharged in a Trust Deed (or a Bankruptcy)
- Equity in your property and/or other assets that you own may have to be realised for the benefit of your creditors, subject to value and your individual circumstances, do no hesitate to take advice if you have assets that you would like to protect
- Your Protected Trust Deed will be registered on the Register of Insolvencies, a publicly available online register of all insolvencies in Scotland
- Employment or future employment prospects may be affected by entering into a Trust Deed
- In a Trust Deed, the Trustee has claim on assets acquired for a period of 4 years from the date of signing the Trust Deed e.g. inheritance
Find out more
Contact an experienced debt adviser at Harper McDermott to find out more about Debt Help in Scotland available to you.
We are here to help you decide the best course of action to suit your individual needs and support you every step of the way. If you would like a fresh start, get in touch today on 01412783989.
Types of Debt We Help With
We provide debt solutions that can be used to manage many unsecured debts, including:
Credit Cards
Payday Loans
Overdrafts
Store Cards
Personal Loans
Council Tax Arrears
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