Protected Trust Deed (PTD)
What Is Trust Deed?
What Is A Trust Deed?
A Trust Deed, or Protected Trust Deed, is a Scotland-specific formal arrangement which involves you making an affordable monthly payment towards your included debts over a fixed period of time, usually four years. After successful completion of your Trust Deed, any remaining balances on debts included will be written off.
You must be a resident of Scotland to apply for a Trust Deed and have qualifying unsecured debts of £5,000 or more. You must have enough disposable income to be able to sustainably meet your regular monthly payments.
Advantages and Benefits
- A Trust Deed offers you legal protection from your included creditors.
- A Trust Deed usually has a fixed term of four years, and at the end of the term, any outstanding balances on included debts will be written off.
- The payment you make into a Trust Deed is based on an assessment of your own finances, so should always be affordable to you.
- There are no upfront fees; fees are incorporated into your monthly payments and vary between Trust Deed providers.
- Interest and charges on included debts will be frozen and creditors cannot legally chase for additional payments.
Disadvantages and Potential Consequences
- Your credit file will be affected for a period of 6 years, starting when the Trust Deed is approved, and your ability to obtain credit will be restricted for the period of the Trust Deed.
- A Trust Deed can impact on certain jobs, such as those in finance and the Civil Service. If you are unsure, please check your employment contract.
- If the majority of your creditors object to the protection of your Trust Deed, you may be asked to release equity in your home in month 36, which may result in a higher interest rate, or have your Trust Deed extended by 12 months to make additional payment towards your debts.
- Failure to keep up to date with Trust Deed payments may result in your creditors filing for your bankruptcy, which they can do without your consent.
- Your expenditure will be restricted.
- Your details will appear on a publicly searchable record.