Live in Scotland? A Trust Deed could be the best debt solution for you.
A Trust Deed or Protected Trust Deed (PTD) is the Scottish version of an Individual Voluntary Arrangement (IVA). Also known as Scottish Trust Deeds, PTDs are only available to people who live in Scotland. Like IVAs, they involve making a formal agreement with your unsecured creditors to repay as much of your debts as you can afford over a set time period, usually four years.
We at Debt Correct work with an independent panel of licensed Insolvency Practitioners (IP). Debt Correct may receive a referral fee from the Insolvency Practitioner for this service.
Once your PTD is in place, your creditors are legally-bound not to pursue you for any of the debts listed within it. After the PTD has ended, any remaining debts will be written off and you’ll receive a letter of discharge.
PTDs can be a good alternative to bankruptcy as you can usually keep your home and other necessary assets such as a car to get to work. However, if you do own a property, you may need to re-mortgage it and/or release some equity to help pay off your debts.
How Protected trust Deeds work
A PTD is set up and supervised by a Trustee, who must be a licensed Insolvency Practitioner (IP). A trust deed transfers your rights to the things that you own (assets), to a trustee or IP who can sell them to pay your creditors. Your IP will look at your debts, income and outgoings to work out how much you can realistically afford to pay your creditors each month. They’ll then create a repayment proposal for your creditors to consider.
The proposal must be fair and reasonable from your creditors’ viewpoint. If more than half of your creditors in number or those accounting for one third or more of your debt do not agree to the terms of the trust deed, it will not go ahead or be protected.
You then make a single payment each month to the Trustee, who distributes it to your creditors. This usually continues for four years, although PTDs can last up to five years. Provided you comply with the terms of the PTD and make all your payments on time, your creditors will discharge any outstanding unsecured debts when it ends.
Cooperating with the Trustee
Entering into a PTD is voluntary. However, once a Trust Deed is in place, it’s legally binding. This means you must tell the Trustee if there are any changes in your personal circumstances that might affect the PTD. These include any increase or decrease in your income or expenses, a financial windfall, or the sale or gain of any assets.
Your Trustee will consider these changes and if necessary, will ask your creditors to vary the terms of your PTD and/or change your payment amounts. However, your creditors don’t have to accept these variations.