Debts Over £15,000

Introducing the Protected Trust Deed

The Protected Trust Deed is offered only in Scotland as is similar to the IVA (Individual Voluntary Arrangement). It is a legally governed procedure by which you can repay your debt over a specified period of time. Monthly payments are based on what you can afford and after the period of your Protected Trust Deed, any remaining debt is written off.

The Protected Trust Deed process

The first part in the process of entering into a Protected Trust Deed is to compile a full list of creditors (people you owe money to), how much you owe, and what you can afford to pay each month.

The trustee will put together a form of proposals to the lenders for approval and administer the Protected Trust Deed. The Trust Deed may be registered as a Protected Trust Deed. This prevents lenders from taking legal action against you and ensures that interest will be frozen on your debt. The Protected Trust Deed is granted if two thirds or more of your creditors by value agree to it.

If you enter into a Protected Trust Deed then your creditors will have the right to receive any equity that you may have in your home. However, there are ways that you can protect your property.

Entering into a Protected Trust Deed means that you are entering into a contract to repay your debt, usually at a reduced rate. As such you agree during the term of the Trust Deed to:

• Co-operate with the trustee.
• Pay the agreed monthly contribution.
• Not take any further credit.
• Advise the trustee should you receive any unexpected windfalls or your financial circumstances change.

What are the advantages of a Protected Trust Deed?

• The trustee handles all correspondence from creditors, therefore relieving the pressure of debt.
• A Protected Trust Deed is usually more flexible and costs less to administer than sequestration (bankruptcy).
• With a Protected Trust Deed, your creditors will be unable to add further interest, charges, or take any further action against you.
• You will in most cases still be able to hold certain public offices.
• You will in most cases still be able to remain self-employed and continue to serve as a director of a company.
• Protected Trust Deeds normally last 3 years, after which any remaining debt will effectively be written off.
• Information about the Protected Trust Deed is not published unlike sequestration (bankruptcy).

1. What is the difference between a Protected Trust Deed and an IVA (Individual Voluntary Arrangement)?
2. How do I know whether a Protected Trust Deed is the right option to my debt problem?
3. Is a Protected Trust Deed sequestration (bankruptcy)?
4. Why will my creditors agree to a Protected Trust Deed?
5. How long will the Protected Trust Deed last?
6. Will I lose my house if I enter into a Protected Trust Deed?
7. Will a Protected Trust Deed affect my employment or professional status?
8. I own a business, will I have to close it?
9. Can anyone find out that I'm in a Protected Trust Deed?
10. Which creditors can be included in a Protected Trust Deed?
11. What will happen if I fail to keep up payments on the Protected Trust Deed?
12. What will happen at the end of the Trust Deed?
13. Do I need to notify my partner or family?
14. Will all debt covered by the Protected Trust Deed?
15. How does secured and unsecured debt differ?
16. Do creditors have to accept the terms of the Protected Trust Deed?
17. Can a single creditor refuse the Protected Trust Deed?
18. Will I be protected from further recovery action, charges and interest?
19. What if my financial situation changes?
20. Can a Protected Trust Deed be cancelled?
21. How long will it take to set-up a Protected Trust Deed?
22. What will happen if the Protected Trust Deed is not approved?

A. A Protected Trust Deed is the Scottish equivalent (in principle) of an IVA (Individual Voluntary Arrangement).

A. The UK insolvency Helpline is a 'best advice' debt solution organisation, this means that our consultants provide the most appropriate, unbiased advice for your debt problem, and our advice is free and without obligation.

Some debt solution companies promote the solutions that make them the most money, or don't consider the full range of solutions to debt. The UK insolvency Helpline's policy is to always provide the best advice and offer a complete range of solutions.

A. Although the letters and calls you may have experienced recently may suggest otherwise, your creditors want to help you with your situation and recover as much of their debt as possible. As long as you communicate honestly with them about your situation, they will understand and will in most cases accept less than what you owe if that is all you can afford and as long as they are satisfied that you will keep to any agreement.

Sequestration (bankruptcy) is costly, time consuming, and a large amount of the money raised from a sequestration (bankruptcy) will be used to cover professional fees, therefore creditors would in most cases prefer not to resolve the situation in this way.

A Protected Trust Deed offers the simplicity of a repayment arrangement between yourself and your creditors with legal backing, without the high cost and low returns of a sequestration (bankruptcy).

Your creditors will welcome a Protected Trust Deed where appropriate, as an effective resolution to the situation that you find yourself in.

A. It is very important that once in a Protected Trust Deed, that monthly payments are made as proposed. If at any point your financial situation changes and the monthly payments are no longer affordable, then you must consult immediately with your Trustee.

If you don't keep up payments then your supervisor can initiate sequestration (bankruptcy) proceedings against you.