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Protected Trust Deeds

Although there are a number of solutions which exist, there is no other financial arrangement that permits you the protection from your creditors, including the freezing of interest together with the flexibility and affordability of a Protected Trust Deed.

A Protected Trust Deed is a sensible and realistic way forward for Scottish Residents who are having genuine difficulty in servicing their debts but who want to avoid Sequestration - the Scottish equivalent of bankruptcy.

Once protected a Trust Deed offers protection from your unsecured creditors. It is a legal agreement between you and your creditors which allows you to pay back just what you can afford, usually for a period of 36 months after which time the remaining debt is written off and you can look forward to a debt free fresh start. For more information on Trust Deeds click here

The main advantages to the Protected Trust Deed are:

• A Protected Trust Deed puts you in control of your finances
• You only pay what you can reasonably afford to pay
• All interest and charges on your debts are frozen
• Creditor pressure is removed
• There is no Court involvement
• When the Protected Trust Deed is completed all remaining unsecured debts included in the arrangement are written off

Our experienced and friendly team are waiting to hear from you and will be delighted to provide you with advice on all of the options available subject to your particular circumstances.

Simply contact us free on 0800 092 8002 or complete the fresh start box on the right for a free and confidential consultation.

Trust Deed Detail

What is a Trust Deed

A Trust Deed is a legally binding agreement between you and your creditors in which you agree to make a regular contribution from your income and to release certain assets to your trustee. Your trustee will negotiate with your creditors on your behalf and pays them a proportion of the amount owed to them. It is a real alternative to Bankruptcy and normally lasts for three years. At the end of a Trust Deed the balance of any unpaid debts included in the arrangement are written off.

As this is a legally binding document you may wish to take independent legal advice.

Under legislation, if your creditors do not object to the Trust Deed it will become protected and therefore binding on all your unsecured creditors.

Signing a Trust Deed

A Trust Deed can only be set up with the help of a Licensed Insolvency Practitioner who is there to advise you and to put your Trust Deed proposal to your creditors. The Insolvency Practitioner must at all times take your interests and those of your creditors into account.

Before you sign a Trust Deed our staff will advise you on the various options available to you. Should you consider a Trust Deed is the way forward for you we will help you to establish a list of your creditors, prepare an income and expenditure statement and a set an affordable monthly contribution.

We'll notify all your creditors that you have signed a Trust Deed and send them details of the proposals.

The creditors have 5 weeks in which to object. Should the trustee not receive a sufficient number of objections then the Trust Deed will become protected.

Protected Trust Deed

Once the Trust Deed becomes protected all your unsecured creditors are bound by it and can no longer pursue you for the money owed.

As long as you continue to pay your monthly contributions and co-operate with your trustee as regards your assets your unsecured creditors can not commence any legal proceedings. All correspondence including telephone calls with your creditors should stop.

Payment

The monthly contribution will be based on your surplus income after allowing for the day to day living expenses of you and your family. You will also be expected to surrender certain other assets i.e. equity in you property, car or other assets where necessary (see further notes).

Ending the Trust Deed

A Trust Deed will normally last for 3 years but may be extended by the trustee in certain circumstances.

The trustee, after deducting costs, remuneration and outlays, will distribute the realised funds to your unsecured creditors in full and final settlement of everything you owe.

At the end of the Trust Deed the creditors will have no further claim against you and, as far as you and the creditors are concerned, the balance of any unpaid debts is written off.

Benefits of a Trust Deed

A Trust Deed is a sensible and realistic solution when you have money troubles, when creditor pressure is causing sleepless nights and family arguments or when it would take you many years to repay your debts.

The other advantages of a trust deed include:

• You're finances are easier to control with only one affordable monthly payment to your unsecured creditors.
• You only pay what you can reasonably afford to pay
• All interest and charges on your debts are frozen
• Creditor pressure is removed
• There is no Court involvement
• No notification to your employer
• When the Protected Trust Deed is completed all remaining unsecured debts are written off.

Creditors attitude to a Trust Deed

A Trust Deed will normally produce a better outcome for the creditors than would be available to them with an alternative, such as Sequestration (court driven insolvency proceedings). It is a way of paying back a proportion of the debt based on available assets and disposable income when you are insolvent; and is normally looked upon favorably by your creditors as you are seen to be volunteering to resolve your financial problems.

Furthermore, creditors have the security of knowing that the Trust Deed is being administered by a suitably qualified professional.

Obtaining Credit

During the course of the Trust Deed you will be required to obtain the approval of your trustee should you wish to raise credit in excess of £250, you must also notify the party giving you credit that you have signed a Trust Deed

You may encounter difficulty in obtaining credit at the end of the trust deed but you will be in a much better position if you are able to demonstrate that you have co-operated with your trustee and have successfully completed your trust deed.

Defaulting on Contributions

The period of the Trust Deed may be extended to allow any missed payments to be paid.

However, should you fail to co-operate with the trustee as regards paying the agreed monthly contribution it is likely that the Trustee will petition for your Sequestration.

Your Home

Your normal mortgage repayments should continue. A secured lender (e.g. the Bank or Building Society which holds the mortgage) is not bound by the Trust Deed and retains its normal rights.

The only interest the Trustee is likely to take in your home is in respect of your share in any "equity" available. A valuation of the property will be carried out and the level of any outstanding mortgage or secured loans established. Equity is the difference between the value of the property and the outstanding debts secured on the property. Once this has been calculated, arrangements will be made for this sum to be paid to your Trustee. This can be done by re-mortgaging, a payment being made from a third party (often a family member) or additional payments being made at the end of the Trust Deed term

Costs and Fees

The trustee's fees and the costs of administering your Trust Deed will be estimated by the trustee and advised to all creditors when they are notified of the Trust Deed. They will be deducted from the agreed contribution and proposed asset realisations prior to any payment being made to creditors.