Protected Trust Deed
What is a Protected Trust Deed?
A Protected Trust Deed is a formal debt solution available to people who live in Scotland and who are experiencing serious financial difficulties.
A Protected Trust Deed is an alternative to Sequestration, as bankruptcy is sometimes referred to in Scotland.
A protected Trust Deed allows a person who is struggling to maintain their personal financial commitments an opportunity to agree lower repayments with their creditors.
The Protected Trust Deed repayments are calculated to be what is deemed affordable for the applicant, after all essential living costs have been accounted for.
In return the Protected Trust Deed applicant agrees to pass ownership of all their assets to a Trustee, who is appointed to administrate their Trust Deed.
The Protected Trust Deed has a fixed term, which is normally 36 months.
On successful completion of the Protected Trust Deed the applicant is considered debt free, even though only a small percentage of the original debt may have been repaid.
Any outstanding debt will be legally written-off.
Before a Trust Deed can be considered 'Protected' and therefore legally binding on all creditors, its terms must be accepted by at least 66% of the creditors in regards to value of the total debt, and/or more than half of the creditors in actual credit numbers.
Here are some further qualifying criteria which must be met before a Trust Deed can expect to reach Protected status.
They are:
- There must be more than £10,000 owed
- There must be more than 2 creditors
- The applicant must be able to repay a minimum of 10% of his total debt, once the costs of the Protected Trust Deed have been deducted form his contributions.
A Protected Trust deed must be administrated by a licenced Insolvency Practitioner, who acts as Trustee for the duration of the agreement.
During the Protected Trust Deed the applicant is subject to annual reviews, where the affordability of the contributions is reassessed by the Trustee.
For more info regarding Protected Trust Deeds please call an adviser on 0800 088 7502
