Scotland
If you’re struggling with unaffordable debt, a Protected Trust Deed could help you regain control of your finances. But how does it work, who qualifies, and is it the right solution for you?
In this guide, we’ll explain everything you need to know about Protected Trust Deeds in Scotland, including how they work, who they’re suitable for, the advantages and disadvantages, and what happens when your Trust Deed comes to an end.
What is a Protected Trust Deed?
A Protected Trust Deed (PTD) is a formal legal agreement available to people who live in Scotland who is struggling with over £5k of unaffordable unsecured debt.
Once your Trust Deed becomes protected, your creditors are then prevented from taking further action to recover the debts included in the arrangement, provided you continue to meet its terms.
Instead of making separate payments to multiple creditors, you’ll normally make one affordable monthly payment towards your debts instead.
Once the protected trust deed has been completed successfully, any remaining unsecured debt included in the solution will be written off.
Every person’s circumstances are different, so whether a Protected Trust Deed is suitable depends on your income, expenditure, assets and overall financial situation.
How does a Protected Trust Deed work?
Although every case is different, the process usually follows these steps.
1. You receive confidential advice
An experienced adviser will take the time to understand your financial circumstances and discuss the debt solutions available to you.
2. Your finances are assessed
Your income, household spending, debts and assets are reviewed to determine whether a Trust Deed may be suitable.
3. Your Trust Deed is prepared
If a Trust Deed is appropriate, it is prepared by a licensed Insolvency Practitioner.
4. Creditors are notified
Your creditors are informed and, provided the legal requirements are met (objections not received from either a majority in number or over one third in value of your creditors), your Trust Deed can become protected.
5. You make one affordable monthly payment
Instead of managing multiple repayments, you’ll usually make a single monthly payment based on what you can realistically afford. Payments are usually for a period of 4 years, although this can be extended in certain circumstances if you own assets.
6. Completion
Once you’ve successfully completed your Trust Deed, any remaining qualifying unsecured debt included in the arrangement will be written off.
Could a Protected Trust Deed be right for you?
A Trust Deed may be suitable if you:
- live in Scotland
- have unsecured debts totalling more than £5,000 which you can no longer afford to repay
- feel you cannot repay these debts within a realistic timescale
- have a regular income
- want one affordable monthly payment
- want protection from further creditor action
- are looking for a structured route towards becoming debt free
Only a full assessment of your circumstances can determine whether a Trust Deed is appropriate.
Find out if you could qualify
When you make an application for help and advice through this website, you just need to indicate
- approximately how much you owe
- your household circumstances
- what’s worrying you most
- what you’d like to achieve
- your preferred contact details
Once submitted, one of our experienced advisers will review your information and explain the options that may be available.
What debts can be included?
A Protected Trust Deed is generally designed to deal with unsecured debts, including:
- Credit cards
- Personal loans
- Store cards
- Overdrafts
- Payday loans
- Catalogue debts
- Benefit overpayments (in some circumstances)
- Utility arrears
- Rent arrears
Some debts cannot be included, such as student loans and fines due to the crown so it’s important to discuss your individual circumstances with an adviser.
What are the benefits?
Depending on your circumstances, a Protected Trust Deed may offer several advantages.
One affordable monthly payment – rather than juggling multiple repayments, you’ll usually make a single monthly payment based on what you can reasonably afford.
Interest and charges will stop – once your Trust Deed becomes protected, creditors included in the arrangement cannot continue adding interest or charges in the usual way.
Protection from creditor action – once your Trust Deed becomes protected, your creditors cannot take further action to recover the debts covered by your Protected Trust Deed, provided you comply with its terms.
A route towards becoming debt free – once you’ve completed your Trust Deed successfully, any remaining qualifying unsecured debt included in the arrangement will be written off.
Are there any disadvantages?
It’s important to understand both the advantages and the potential drawbacks.
A Protected Trust Deed:
- will affect your credit rating
- is a formal insolvency solution
- may affect assets you own
- requires you to maintain agreed payments
- is recorded on the public Register of Insolvencies
Fees are also payable to the Trustee who oversees the arrangement, however these are generally taken from the payments you make each month and are not over and above what you can afford.
A good adviser should explain these implications fully before you make any decision.
Will I lose my home?
Many homeowners successfully complete Protected Trust Deeds. However, the equity in your property may need to be considered as part of your arrangement. Exactly how this is dealt with depends on your individual circumstances and receiving advice from a qualified debt adviser is key to a successful outcome here.
Can I keep my car?
Often, yes. Many people are able to keep a vehicle, particularly where it is needed for work or everyday family commitments. Whether this applies depends on your circumstances and the value of the vehicle. Again, receiving tailored advice from a qualified debt adviser is key to a successful outcome here.
How long does a Protected Trust Deed last?
Most Protected Trust Deeds run for around four years, although this can vary depending on individual circumstances and the terms of the arrangement.
Your adviser will explain how long your Trust Deed is expected to last before you decide whether to proceed.
What happens when my Trust Deed ends?
If you’ve met the terms of your Trust Deed:
- your obligations under the arrangement end
- remaining unsecured debts included within the Trust Deed will be written off
- you can begin rebuilding your financial future
Many people describe completing a Trust Deed as a significant milestone and the start of a fresh chapter.
Is a Protected Trust Deed right for me?
A Trust Deed can be an excellent solution for some people, but it isn’t right for everyone.
Other Scottish debt solutions include:
- Debt Arrangement Scheme (DAS)
- Sequestration
- Informal repayment arrangements
The right solution depends entirely on your personal circumstances and financial goals.
Ready to find out which solution is right for you?
You don’t need to know which debt solution you need before asking for help.
Complete our secure online enquiry form and one of our experienced advisers will review your circumstances before explaining the options available to you.
✔ Free initial advice ✔ Confidential ✔ No pressure ✔ No obligation
Frequently asked questions
Is a Trust Deed legally binding?
Yes. A Protected Trust Deed is a formal legal agreement administered by a licensed Insolvency Practitioner.
Can creditors still contact me?
Once your Trust Deed becomes protected, creditors included in the arrangement are generally restricted from taking further recovery action, provided you comply with its terms. You may still receive occasional contact, but this will reduce over time and the important thing to remember is that they cannot take any further action to recover the debt once the trust deed becomes protected.
Will my employer know?
In many cases, a Trust Deed will have no direct impact on your employment. However, some professions have specific rules regarding insolvency, so you should always seek advice based on your individual circumstances. In vary rare circumstances, if someone does not co-operate with the Trustee, they may contact your employer and have the monthly payment deducted from salary. Maintaining open dialogue with the Trustee if your circumstances change is essential to limit the chance of this happening.
Can I pay off my Trust Deed early?
If you come into sufficient funds to repay the debts in full plus interest and the Trustee’s fees and outlays, the trust deed can be brought to an early conclusion. In this scenario it is essential you contact your Trustee promptly to discuss arrangements.
How do I know if I qualify?
The easiest way is to complete our free assessment. Once we understand your circumstances, we can explain which debt solutions may be available and whether a Protected Trust Deed could be suitable.
Speak to WB Debtcare
If you’re worried about debt, you don’t have to work out the solution on your own.
Our experienced team has helped thousands of people across Scotland understand their options and take positive steps towards becoming debt free.
Complete our free assessment today and we’ll review your circumstances, answer your questions and help you find the solution that’s right for you.
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