Protected Trust Deed
What is a Trust Deed?
A Trust Deed is a solution for residents in Scotland, it is a legally binding agreement that can only be arranged and administrated by an insolvency practitioner or an accountant in bankruptcy. The term of a Trust Deed is over a period of 48 months and you will pay back monthly instalments based on what you can afford to pay. At the end of the term any remaining debt is written off and you can no longer be legally chased for the debts included.
As with all solutions it best to discuss your situation with a debt advisor so they can review your circumstances and determine the most suitable solution for you.
Below are some advantages and disadvantages of a Protected Trust Deed.
Advantages
- A Protected Trust Deed offers you legal protection from your creditors
- A PTD usually has a fixed term of 4 years and at the end of the PTD any outstanding balances on included debts will be written off
- The payment you make into a PTD is based on your income and expenditure, so should always be affordable to you
- The fees are usually incorporated into your monthly payments and vary between PTD companies
- Interest and charges in included debts will be frozen and creditors cannot legally chase for additional payments
Disadvantages
- Your credit file will be affected for 6 years and you will be restricted from obtaining credit during the IVA. Your ability to obtain credit may also be affected
- Any debts not included in your PTD will remain outstanding
- A PTD can impact on certain jobs, such as those in finance and the Civil Service, if you are unsure check your employment contract
- Failure to keep up to date with PTD payments may result in your creditors filing for your bankruptcy, which they can do without your consent
- Restrictions will be placed on your expenditure once entering into a PTD
- Some creditors may not approve a PTD Proposal
- Because this is a formal solution your details will be placed on a publicly viewable register
- Homeowners may need to release equity from the value of their homes to pay off debts, and that a re-mortgage may attract higher interest rates or, if no re-mortgage is available, a Trust Deed may be extended for 12 months