Trustdeed (Trust Deed)

A protected trust deed (PTD) is a voluntary but formal arrangement that is used in Scotland only where a debtor (who can be a person or partnership) grants a ‘trust deed’ in favour of the trustee who transfers their estate to the trustee for the benefit of creditors. Trustdeed are a very useful way for people to deal with debt problems.

A Trustdeed will protect you from the legal enforcement of debts which are included in the trust deed, but only once it has become protected. It will not reverse any action that has been taken prior to the trust deed becoming protected, such as earning or bank arrestments, although the trustee may negotiate the lifting of any arrestment. Many people who enter trust deeds are able to keep their homes, but where there is equity, that equity will normally have to be realised to increase the return to your creditors. This can be achieved by third party buy outs or remortgaging (if you have the equity and income multiple to do it. If you do not, the trustdeed may be extended in length).

When you enter into a protected trust deed (PTD), you take on the responsibilities and obligations of a legally binding contract to repay your debt. You agree to the terms of the Trust Deed you commit to:

• Full cooperation with the trustee
• To pay the agreed monthly contribution on time
• To not enter into any additional credit agreements
• To advise the trustee of any unexpected windfalls or payments or that your financial circumstances change

Where, however, you experience a change in circumstances during your Trust Deed, such as unemployment, the Trustee should review your finances to assess what is an appropriate level of contribution. This may mean you will only have to pay a reduced contribution or no contribution. Likewise, if during a Trust Deed your circumstances improve, you may be required to pay an increased monthly contribution.

Where you cannot maintain your level of  monthly contributions, although you may be allowed to pay a reduced contribution or no contribution, you will still need to make arrangements to realise any equity in your property (if this was involved).

What are the consequences of a trust deed?

Signing a trust deed is a serious step - you must be sure that you understand what you are signing.

Before you sign the final proposal, a trustee must give you advice about the consequences and must tell you about the alternatives to a trust deed. The alternatives include a debt management plan and a Debt Payment Plan under the Debt Arrangement Scheme. The trustee must also give you a copy of the Scottish Government's Debt Advice and Information Package (this information is provided after you have called us and information has been taken).

Like bankruptcy, a protected trust deed is likely to affect your credit rating and. If the trust deed fails to become protected the creditors may be able to make you bankrupt. At that point consider a Debt Management Plan as an alternative debt solution.

The trustee must give the debtor an indication of what they will charge before the trust deed is signed.

A Trust Deed is a major financial decision.  We make sure that you have the very best Insolvency Practitioner working on your behalf to get the result you need. We provide honest and impartial advice to all who require debt advice.

A competent Trust Deed professional is essential, but anyone entering into a Trust Deed also needs to know that they will be looked after with courtesy and respect. Three years is a long time.

For more information call us on 0800 612 6076 or e-mail info@thedebtcommunity.co.uk