A Protected Trust Deed (PTD) is a formal arrangement between you and your creditors which allows you to repay your debts at an affordable rate over a pre-agreed period of time (usually a minimum of 4 years).
During this repayment period, your creditors will not be able to chase you for further payment or seek legal action against you. From the date of approval, your creditors will no longer be able to add interest and charges to the amount you owe.
Your monthly payments will be based on your affordability. At the end of the period, any remaining balances will be written off.
What is the criteria?
To qualify for a PTD, you must:
- Live in Scotland, or have lived in Scotland within the past year
- Demonstrate that you cannot afford to repay your debts in a reasonable period of time
- Have debts of at least £5,000 for a trust deed to become protected
What does the service cost?
The fees charged for a PTD vary and will be explained to you before you go ahead. Creditors who vote on trust deeds will often cap the levels of fees your trustee can charge. The fees are deducted from your monthly contributions.
What happens to my property?
If you have equity in your property, a trust deed will usually require that a share of the equity is paid into your arrangement. This can be done by remortgaging your property or by having a 3rd party pay it on your behalf. The value of your equity will be determined at the start of the trust deed.
Will my credit rating be affected?
Your credit rating will be affected for up to 6 years from the date your PTD is approved.
What else do I need to know?
Only a licensed Insolvency Practitioner can propose the arrangement on your behalf. Your Insolvency Practitioner will review your income and expenditure to determine what you can afford to contribute towards your PTD. The single payment towards your PTD will replace all of the monthly payments to your creditors.
Your Insolvency Practitioner will send a proposal to your creditors detailing your plan for repayment. Once they have received it, they will have 5 weeks to respond. Providing no more than a third of your creditors reject the proposal, your trust deed will become protected. Once your trust deed is protected, your creditors will no longer be able to chase you for payment or seek further action against you.
You will be required to declare any inheritance or windfalls above the value of £500 to your Insolvency Practitioner. Regular overtime and bonuses will also be taken into consideration.
You cannot borrow more than £500 while you are in your PTD without notifying your creditors.
All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.
For further information on debt solutions and their effects, AIB has produced a debtor’s guide available here.
There is free debt help and advice available through a variety of debt charities. For more information, we recommend you visit http://www.moneyadvicescotland.org.uk/
Contact Debt Advisory Service
For more information on Protected Trust Deeds, please contact us for debt advice today on 0808 301 9527 or simply fill out our Debt Advice Enquiry Form.