A Protected Trust Deed (PTD) is a legal process available only to residents in Scotland which offers debtors an alternative to bankruptcy (Sequestration)
A Protected Trust Deed (PTD) is designed to enable those who cannot repay their debts a way to establish, a monthly repayment schedule based on what the debtor can afford to pay. The Protected Trust Deed (PTD) will last for a specified period, usually three years. When the specified term of the arrangement comes to an end, any remaining debts are written off. |
How does a Protected Trust Deed (PTD) work?
The Trust Protected Deed (PTD) is a way for people to repay their debt at a set monthly figure until the agreement has finished, Agreements normally last 3 years. The Protected Trust Deed is supervised by a licensed insolvency practitioner, who is responsible for all negotiations with your creditors and who is also responsible for ensuring that you keep to the terms of the Trust Deed. |
Alternative Debt Solutions
Your Debts Cleared look at your financial situation and offer the best debt solution for you. We offer other solutions such as Debt Management Plans (DMP). Debt management enables you to pay one single lower monthly payment to all your unsecured credit companies, taking away the stress and worry of day-to-day dealing with your creditors.
Once your creditors can see a regular pattern of monthly payments being paid to them by our company, they will be happy to deal directly with us and we will negotiate the freezing of charges and interest on your accounts |
| Advantages of a Protected Trust Deed |
- The trustee handles all correspondence from creditors, therefore relieving the pressure of debt.
- A Protected Trust Deed (PTD) is usually more flexible and costs less to administer than bankruptcy (sequestration).
- With a Protected Trust Deed (PTD), 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 (PTD) normally last 3 years, after which any remaining debt will effectively be written off.
- Information about the Protected Trust Deed is not published unlike bankruptcy (sequestration).
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| Disadvantages of a Protected Trust Deed |
- Existing arrestments and other diligence continue to be effective. It should be noted that Councils who carry out earnings arrestment will generally lift arrestments upon protection of the Trust Deed.
- You cannot be a company director of a limited company unless the company’s Article of Association state otherwise.
- The arrangement is binding on you as well as your creditors. If you were to default on the arrangement then the Insolvency Practitioner can petition for your bankruptcy (Sequestration)
- Entering into any arrangement with your creditors may affect your credit rating.
- Creditors are not obliged to accept a proposal for a Trust Deed. However, the Trustee will negotiate with all your creditors. Unless creditors, who are owed more than one third of the total debt object (which is extremely rare), the Trust Deed will become protected.
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Sequestration (Bankruptcy)
Sequestration is another legal term for personal bankruptcy in Scotland.
Sequestration involves the transfer of your assets and property into the hands of a Trustee for the benefit of the lenders.
Sequestration is initiated by a petition to the Sheriff's Court, after which a Trustee would be appointed by the court to your case. The appointed Trustee is accountable for the transfer (sale) of your assets (house, valuable items, car, investments and savings etc) for the benefit of your creditors. |
| The Pros and Cons of Sequestration |
| Pros |
- Sequestration will remove the pressure you are suffering from creditors.
- All your debts will be written off.
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| Cons |
- You will lose control of your assets which may entail your house, car and any household effect (if they are deemed to be of excessive value) being sold.
- Your sequestration will be reported in the local press and in the Edinburgh Gazette.
- While you are sequestrated it will be unlawful for you to incur credit of more than £250 unless you tell the lender that you are an undischarged bankrupt.
- There are some occupations which carry restrictions about being sequestrated.
- You are prohibited from acting as a director of a company.
- You need the permission of the court to take any part in the promotion, formation or management of a limited company.
- You are required to inform all persons concerned in the sequestration if you are about to trade in any business under any other name.
- You cannot included a Student Loan,
- If sequestration is granted you cannot become:
a Member of Parliament.
or act as a Justice of the Peace (JP) or Governor of a School.
a member of the Local Authority.
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| Many of our customers have found that a Protected Trust Deed (PTD) can prevent Sequestration happening to them. As a Trust Deed provides much of the relief offered by Bankruptcy but without the severe constraints it imposes, it is more likely that a Trust Deed will be the most effective solution to severe debt problems. |
Advantages of a Protected Trust Deed (PTD) |
- Dramatically cut your monthly outgoings with one affordable payment
- Creditors will be unable to add interest and charges to your debt
- A Trust Deed is more flexible than bankruptcy
- You make just one payment per month from your disposable (surplus) income
- You could be totally debt free in 3 years
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