A Protected Trust Deed is a form of insolvency available only to residents of Scotland. It offers an alternative to bankruptcy (sequestration) — one affordable monthly payment based on what you can realistically afford, after which any remaining qualifying unsecured debts included in the Trust Deed are written off. It won’t be right for everyone, so we’ll explain the risks too.
A Protected Trust Deed is a form of insolvency, is recorded on the public Register of Insolvencies and will affect your credit rating. Your initial advice is free and there’s no obligation; if you go ahead, fees apply and are shown to you in full first. We’re a commercial service — free, independent debt advice is also available from MoneyHelper and the Scottish Government.
A Protected Trust Deed is a legal process accessible only to residents in Scotland, and it offers an alternative to bankruptcy. A Trust Deed enables those who are unable to repay their debts to establish a monthly repayment schedule based on what they can afford to pay. The Trust Deed lasts for a specified period, and when that term comes to an end, any remaining unsecured debts included in the Trust Deed are usually written off.
Your Protected Trust Deed is supervised by a licensed Insolvency Practitioner. The practitioner is responsible for all negotiations with your creditors and for ensuring that you keep to the terms of the Trust Deed. A Trust Deed becomes a Protected Trust Deed once your creditors have agreed to the proposal: at least half of your creditors need to accept it, or creditors representing at least two thirds of your total debt. If a creditor doesn’t respond, it’s assumed that they’ve accepted the offer.
Once the Trust Deed is protected, your creditors can no longer take action to collect the debt, including chasing you for payments or starting court action. Instead of making payments directly to your creditors, you make one payment to the trustee managing the Protected Trust Deed, and they distribute it to your creditors on your behalf.
A Trust Deed brings your unsecured debts together into a single monthly payment set by what you can afford — not by what your creditors demand.
A Protected Trust Deed can reduce what you have to pay back. Any qualifying unsecured debts included in the Trust Deed and left unpaid at the end are written off — the amount depends on your circumstances and your creditors’ agreement, and is not guaranteed.
We consolidate your credit cards, loans, overdrafts and other unsecured debts into one monthly payment based on your disposable (surplus) income — often lower than what you pay now.
Once agreed with your creditors and the Trust Deed is protected, all interest and charges are frozen, so the amount you owe stops growing.
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See if you qualify →The length of a Trust Deed can vary based on the individual’s circumstances. Typically, the minimum length of a Trust Deed in Scotland is four years, consisting of 48 monthly payments. In certain circumstances the duration can be extended beyond the usual four years. In most cases, a Trust Deed will last for 48 months provided it has not been extended. Once agreed with your creditors, all interest and charges are frozen for the duration.
A Trust Deed is a serious commitment, but for the right person it offers real relief. Here are some of the main advantages.
We deal with your creditors directly, so you no longer have to liaise with them yourself.
Bring your monthly outgoings down to a single payment from your disposable (surplus) income.
Once protected, your creditors cannot take further action against you, arrest your earnings or continue to charge interest.
As well as reducing the time you remain in debt, a Protected Trust Deed can reduce what you repay — how much is written off depends on your circumstances and your creditors’ agreement, and is not guaranteed.
A Trust Deed is a form of insolvency and a serious commitment. Our staff will fully explain the implications so any proposal is affordable, achievable and suitable to your circumstances. Another debt solution may be more appropriate for you.
Only unsecured debts can be included. Secured debts cannot, so you must keep paying your secured creditors (such as your mortgage) yourself, or arrange this with them directly. Any unsecured debts not included in the Trust Deed remain your responsibility.
The arrangement is binding on you and your creditors. If you default, your trustee (the licensed Insolvency Practitioner) can petition for your sequestration (bankruptcy). If you fail to adhere to the terms, your home and other assets may be at risk.
Your creditors are not obliged to accept a proposal for a Trust Deed. Your trustee negotiates on your behalf. If creditors you owe more than one third of your total debt object, your Trust Deed will not become protected.
The trustee only has an interest in any equity in your home. Where appropriate this can be managed — for example by extending the Trust Deed, releasing equity (a remortgage, which could be at a higher rate), or excluding the home from the Trust Deed. If equity can’t be released your home could be affected.
A Trust Deed will affect your credit rating and is recorded on the public Register of Insolvencies, which anyone can search. There are also restrictions on your spending and on taking further credit until it completes.
Any existing wage arrestment orders or other diligence may continue to be effective. It’s important to fully disclose any action already taken against you so the appropriate arrangements can be made.
If the following sounds like you, a Protected Trust Deed could be a solution worth exploring. There are other factors we’ll assess, such as your property status and income.
A typical Trust Deed term (48 payments), after which qualifying unsecured debt you can’t afford is written off.
Check if you qualify Free initial advice · Fees apply if you proceed and are shown in full firstYour initial advice is free and there’s no obligation. Trust-Deeds.co.uk is a trading style of My Debt Plan Ltd — a commercial, profit-seeking service, paid for the debt solution you enter into.
If you go ahead with a Protected Trust Deed, your trustee is paid a fixed administration fee plus a further fee based on a percentage of the funds collected during the Trust Deed, for the work of administering it. These fees are paid from the monthly payments you make, before money is distributed to your creditors — so there is no separate upfront fee for the Trust Deed itself. Once the fixed fee has been set, it can only be increased with the consent of your creditors or the Accountant in Bankruptcy. All fees are disclosed to you in full before you sign anything.
Another option may be available and more suitable for you. We’ll always talk you through the advantages, disadvantages and risks of each before you decide.
A Scottish Government scheme to repay your debts in full through one affordable payment with interest and charges frozen. Because you repay in full, you’ll need enough disposable income to clear your debts over a reasonable period, and it will still affect your credit rating.
Learn about DAS →The Scottish form of bankruptcy. Most, if not all, unsecured debts are written off and creditors must stop contacting you, but it’s recorded on a public register, affects your credit rating and carries restrictions while you’re bankrupt.
Learn about sequestration →Find out in minutes whether a Trust Deed or another Scottish debt solution could help you. It’s free, confidential and there’s no obligation.
Answer a few quick questions about your situation and a debt advisor at My Debt Plan Ltd will be in touch to talk through your options. It’s free, confidential and there’s no obligation.
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Free, independent debt advice is also available from MoneyHelper, StepChange, National Debtline or Citizens Advice Scotland.
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