Protected Trust Deed (PTD)

A Protected Trust Deed, available only in Scotland, is a legally binding voluntary instrument, an alternative to Sequestration. It is the Scottish equivalent of an Individual Voluntary Arrangement

A Protected Trust Deed (PTD) is designed to assist those who cannot repay their debts by creating an affordable montly repayment plan as this payment will be based on the ability to pay after considering living expenses. In addition to the plan including unsecured debts (as in a Debt Management Plan), it may also include arrears owed to HMRC and Council Tax.

A Protected Trust Deed (PTD) is a legally binding agreement with your creditors, its protected status meaning, once accepted, creditors cannot take legal action against the debts (as long as the Trust Deed is adhered to).

The PTD will usually last for three years and when the term comes to an end any remaining debt is written off.

What are the advantages of a Protected Trust Deed (PTD)?

A PTD allows for up to 90% of your outstanding debt to be written off.
With a fixed term of (generally) 36 months, a PTD can lead to you being debt free in a shorter period of time than a Debt Management Plan. Your creditors are legally bound to accept that all the outstanding balances are considered fully and finally settled once the term of the PTD ends.
As the Trust Deed has ‘Protected’ status, your creditors are legally bound by the terms of the Protected Trust Deed. As such they must comply with the demands of the Trustee and all his decisions. The creditors are prohibited from taking legal action against you and are bound to accept the Protected Trust Deed's monthly payment. Equally, the creditors can no longer add interest or late payment charges.

What are the disadvantages of a Protected Trust Deed (PTD)?

The Trustee will charge for his or her service. This needs to be accounted for when determining whether you have sufficient income to make at least the minimum required repayments to the creditors.
It is important to remember that the arrangement is binding on you as well as your creditors. Should you default on the arrangement then a petition for your sequestration (bankruptcy) may be made.
Your ability to obtain credit will be affected by the Trust Deed, both before and after. Equally, you cannot be a company director of a limited company unless the company’s Articles of Association state otherwise.
It should be noted that creditors are not obliged to accept a proposal for a Trust Deed. However, the trustee negotiates with all your creditors. The Trust Deed will become protected unless creditors who are owed more than one third of the total debt object.
All assets and liabilities have to be declared. You will be required to release any equity in your property and assets of large value will be realised.

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Grass Roots

Protected Trust Deed (PTD)

Grass Roots (Financial) Limited