Protected Trust Deed Help in Scotland
How does Protected Trust Deed work?
Are yours debts higher than £5,000 and you are struggling to repay them? Perhaps you are constantly being chased by the creditors? If your unsecured debts are higher than your assets and you are not able to repay them over a realistic period of time there are a few debt help options available.
If you live in Scotland, and are struggling with debt, you might be eligible for a Protected Trust Deed that allows you to make reduced monthly payments via an Insolvency Practitioner (IP). Protected Trust Deed arrangement enables you to stop creditor pressure, freeze your interest and can get a large proportion of your debt written off at the end of the process. To give you a full picture of a Trust Deed we have prepared a table to demonstrate advantages and disadvantages of the procedure.
Every year more than 6,000 people benefit from Protected Trust Deed arrangement in Scotland. It can help you gain control of your finances and get you back on your feet. It is not the only option that can help you tackle your debt problems. We recommend that you talk to a debt expert first and see what other options are available before making a decision. If you live in Scotland and are struggling with your finances, our Insolvency Practitioners and members of their team will provide an initial free consultation, where we will set out the best options based on your circumstance. Our team operate from offices across central Scotland including Glasgow, Edinburgh, Stirling and Dumbarton, and are available to meet virtually too so location is never an issue. Simply give us a call and find out about the Trust Deed arrangement in Scotland.
FAQ about Trust Deed
A Protected Trust Deed is a voluntary form of insolvency that allows you to deal with your unsecured debts. It is a formal procedure that usually takes 4 years, however, the length can be varied depending on your circumstances. A Trust Deed is a legal arrangement between you, your Trustee and your creditors that enables you to benefit from a personalised repayment plan with affordable payments. After the period of 4 years your unsecured debts are written off and you become debt free.
A Protected Trust Deed in Scotland is an alternative to bankruptcy and is similar to an Individual Voluntary Agreement or IVA procedure in England. Even though there are some differences between the two procedures the end goal is the same. If you would like to find our more about a trust deed arrangement you can read our blog.
One of the biggest advantages of a Trust Deed is that it can significantly reduce stress and take the pressure away because you only pay what you can afford through a single monthly payment and you don’t need to deal with any of your creditors directly. Once you sign a Trust Deed all of the pressure from your creditors goes away – you will stop receiving threatening letters, phone calls and emails. Your Trustee will deal with your creditors on your behalf and you will only be dealing with your Trustee. During this arrangement your income and expenditure is monitored every 6 months and your agreed payment reviewed, but at the end of the process anything you haven’t paid will be written off and you will be debt free. You will be able to open a new chapter in your life without any financial stress.
A Protected Trust Deed is a formal debt solution that comes with various restrictions on your financial, professional and personal lifestyle. It is important to understand what this process will involve and if it is the right option for you. Our insolvency experts will be able to explain and help you pick the best option for your situation. So what are the advantages and disadvantages of a Protected Trust Deed?
• Your multiple repayments will be significantly reduced to a single affordable monthly payment made to your Trustee. All of the remaining debts will be written off after a period of 4 years.
• Pressure from your creditors will go away and you will stop receiving correspondence from your creditors. Your Trustee will be dealing with all of the financial queries on your behalf.
• If you adhere to the proposal and don’t have a significant windfall during the period of your Protected Trust Deed then all interest and charges are written off.
• You will be able to retain your car if it is valued at less than £3,000 and is essential for work or family commitments.
• A Trust Deed doesn’t require your presence at the court even though it is a formal debt solution.
• Your credit rating will be affected after signing a Trust Deed.
• Your spending will be restricted and you will have to budget for the length of your Trust Deed arrangement.
• A Trust Deed might affect your employment in professional services so it is essential to discuss it with your HR department.
• You might face bankruptcy if a Trust Deed fails. It is important to note that if you cooperate with your Trustee and keep up with your payments everything should be fine.
• Your details will be put on the Register of Insolvencies and will be accessible for the period of your Trust Deed.
The Trust Deed process can’t be started without a qualified Insolvency Practitioner (IP) otherwise known as a Trustee. In other words you can’t apply for a Trust Deed by yourself as the Trust Deed and all supporting documentation needs to be prepared and signed off by your Trustee. So how does a Trust Deed work? Your appointed Trustee will also assess whether you can make a payment from surplus income. This is called a contribution, you will be required to contribute for at least a period of 48 months unless your circumstances change. The contribution is assessed using the Common Financial Statement (CFS). The CFS is a statutory tool used to assess your household income and expenditure.
The Trustee will then send your repayment proposal to your creditors for approval. This process usually takes up to 5 weeks. After your proposed repayment plan is approved you will have to make a single payment of an agreed sum to your trustee every month for a period of four years. Your trustee will then divide the money between your creditors and will deal with all of their enquiries on your behalf. Once you have successfully made all of your agreed payments at the end of the four year period you will become debt free. Your Trustee will help and support you through the entire process.
The key purpose of the Trust Deed is to avoid creditor action and to ensure that creditors get at least some of the owed money back. Creditors expect you to pay as much as you can afford and can refuse your offer if they do not accept the proposals. It is important to propose an accurate repayment plan calculated in terms of the CFS because by allowing your trust deed to become protected your creditors risk losing everything that you owe them. Once they agree to your terms of payment they cannot take any further action to recover what you owe them or to make you bankrupt.
Your Trustee will help to determine the amount of money that you can afford to repay each month in terms of the Common Financial Statement. It will depend on your current income, expenses, the level of debt and other financial commitments.
FD Debt solutions offer free and confidential advice prior to entering a Trust deed and do not charge any separate set up payments. Your Trustee will receive an administration fee based on your Trust Deed repayment plan. The fee will be calculated into your agreed monthly payment and you won’t have to pay anything extra. The fee structure will be fully explained to you before signing your Trust Deed. You will receive an update annually, which as well as providing an update on progress and dividend prospects for creditors, will set out the proposed fee and outlays intended to be drawn for that period. You and your creditors will have 14 days to raise objection to the proposed fee and outlays if you wish.
Usually the sums required to pay your Trust Deed come from two sources; your income and your assets. You will be required to pay an affordable share of your income to Trustee every month in accordance with the proposal which is agreed with your creditors. Your Trustee will confirm to you how much you need to pay after covering all of the essential expenditure necessary for day to day living. You will have to budget for the period of your Trust Deed to make sure you are able to meet the agreed payments.
In addition, if you have high value items which are not essential these will be sold to pay off your creditors. You will be allowed to keep all of your essential items such as household furniture and appliances, clothes or children’s toys. You might even be able to keep a car if it is not valued at more than £3,000 and is necessary for your work or family commitments.
If your debts are unmanageable and it is hard to make ends meet we advise you to get help as soon as possible to get back in control of your finances.
If you would like to find out more simply contact our insolvency team in Glasgow, Edinburgh, Hamilton, Stirling or Dumbarton. Our qualified and experienced insolvency Practitioners will evaluate your situation and offer the best option suitable to you.
In certain circumstances, if you own your home, it could be excluded from a Protected Trust Deed. The sooner you seek debt advice the more chances you have to protect your home.
For your home to be excluded from a Protected Trust Deed there has to be a mortgage or loan secured against the property. Excluding your home from a Protected Trust Deed means that it will not be conveyed to your Trustee and so will not form part of the Trust Deed arrangement or proposals.
In order for your home to be excluded from a Protected Trust Deed, your secured creditor(s) and unsecured creditors must agree that it will be excluded. Whether creditors will agree to this proposal may depend on how much equity there is in your home and all of your personal circumstances. If you decide to seek agreement from your creditors to exclude your property from a Protected Trust Deed, our licensed insolvency practitioners will act on your behalf to discuss this proposal with your creditors, including any creditor who holds a mortgage or security over your property.
If it is agreed that your home will be excluded from your Protected Trust Deed, your secured creditor will not have a say in whether your Trust Deed obtains Protected status and your mortgage repayment terms will not be affected by the agreement. In the event that your creditors do not agree to the exclusion of your home, you can still propose a Trust Deed that includes your home. Our experienced team at FD Debt Solutions will discuss with you which approach is likely to suit your circumstances and be of most benefit to you.
In circumstances where your dwelling house has to be included in your Protected Trust Deed there are a number of ways the equity in the property can be dealt with:
- A third party could purchase the equity either in a lump sum or in monthly payments to your Protected Trust Deed
- Your contribution period could be extended for a period to allow payment of the equity sums
- Your property could be sold if this is the only option available, but this would be explained at the outset and before any proposals are made to creditors to ensure that you are aware how the equity will be dealt with.
A Trust Deed covers all your unsecured debts (such as unsecured loans, credit cards, catalogues, rent arrears, council tax arrears and utilities arrears). There are a small number of exceptions, such as student loans, court fines and debts incurred as a result of fraud. If you have any debts which cannot be included in a Trust Deed, our advisers will make you aware of this.
If you are looking for insolvency practitioners or Trust Deed advice contact us on 0800 652 0002 or request a call back at the most convenient time for you.