Protected Trust Deed Scotland

What is a Protected Trust Deed?

A Protected Trust Deed applies only in Scotland and is a formal but voluntary arrangement with your creditors where you offer to repay a percentage of what you owe them, usually over a 3 year period. It is not as formal as sequestration (bankruptcy) but may affect you in similar ways, for example your credit rating is likely to be affected.

How do I arrange a Protected Trust Deed in Scotland?

You must arrange a trust deed with an Insolvency Practitioner who will gather the necessary personal and financial information from you in order to present a proposal to your creditors. A notice of your trust deed will appear in the Edinburgh Gazette (a statutory publication not readily available to members of the public). Your creditors are given five weeks from the date of the notice to voice any objections. After this period expires, your trust deed will usually become 'protected', this means that all your creditors are legally bound by its terms. From this point, you simply make one monthly payment to your trustee for the duration of the trust deed.

The trustee acts on behalf of both you and your creditors in order to achieve the best possible financial compromise. This means you no longer have to make repayments to your creditors or deal directly with them, the trustee does this for you. You are protected from any recovery action during the term of the trust deed as long as you maintain your monthly contributions and at the end of the trust deed, the remainder of your debts will be written off - your creditors can't ask for any further funds.

Reputable companies will not charge for advice or ask for up-front fees, and as the IP fees are built into the monthly contributions, you should find a trust deed an affordable alternative to bankruptcy

Advantages of a Protected Trust Deed:

  • The trust deed lasts for a fixed period of time, usually 3 years
  • You no longer have to deal with your creditors yourself, the IP takes care of this
  • At the end of the trust deed, you are debt free
  • The monthly payments will be affordable, based on your income and expenditure
  • A better alternative to bankruptcy for both you and your creditors
  • Your home and other assets can be protected

Disadvantages of a Protected Trust Deed:

  • In some cases, assets will have to be sold for the benefit of the creditors
  • There are some circumstances where trust deeds don't become protected, for example you need agreement from at least half your creditors. A failed trust deed may result in sequestration
  • Your credit rating will be affected for around 6 years
  • A protected trust deed may prevent you from doing some jobs
  • Certain debts cannot be discharged by a protected trust deed, for example student loans, fines/penalties/compensation/forfeiture orders or any liability due to fraud.

Find out more about a Protected Trust Deed in Scotland

For all you need to know about a Protected Trust Deed, please download our free fact sheet or contact us for some free, no obligation help and advice.

Campbell Dallas Debt Solutions - if you have debt problems, we have debt solutions.

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