Protected Trust Deeds

Yes, however, your expected write-off amount will be dependent on your individual circumstances. *The expected debt write-off figure of up to 70% is based on 5,234 Protected Trust Deeds currently administered by Trust Deed Scotland® and granted between January 2017 and September 2021.

The expected write-off % includes the costs of administering each Protected Trust Deed (PTD).  More information relating to the costs of administration can be found by clicking here. 

In this sample of PTDs, the expected write-off figure reaches as high as 83%. 5% of the PTDs have an expected write-off figure between 71% and 83%. 95% of the PTDs have an expected write-off figure of up to 70%, the average (mean) being 45% when the costs of administration are included.

Of the cases in this sample, 1,823 were granted since the Covid-19 pandemic took effect in 2020. The average expected debt write-off for these cases is slightly higher at 49%, when the costs of administration are included.

Your decision to apply for a Protected Trust Deed should not be taken purely on a proposed debt write off amount alone. It is very rare for a Trust Deed not to be protected with Trust Deed Scotland® and we have one of the best protection rates in our industry, for example, in 2020, we achieved a protection rate of 97.9%, this made us the best performing volume provider of Protected Trust Deeds in Scotland.

Trust Deed Scotland® provide tailored debt advice on all available debt solutions in Scotland.

We make sure that our clients get personalised debt advice based on their affordability, lifestyle and needs. May not be suitable for all. Will affect credit rating.

To find out what your options are, simply complete our online form or just call us on 0141 241 6299.

As with all formal debt solutions in Scotland, the main downside for you will be how it affects your credit rating.

Having a Trust Deed will affect your credit rating for six years from the date the Trust Deed begins.

When borrowing money, credit reference agencies will assess the level of risk and base their decision on your financial history. This will include any defaults, whether you’re in a Trust Deed or used any other form of debt relief tool.

However, once your Trust Deed term has been complete and you have been discharged, you can then start to rebuild your credit rating and apply for a mortgage, credit cards etc.

While in a Trust Deed, you will make reduced monthly payments to your creditors, during which time you can get on with your life.

Before you commit to any Scottish debt solution, you would have a detailed call with an experienced debt advisor and the benefits and risks would be fully explained in the context of your own personal circumstances.

Every case is different to the next and with any reputable debt adviser, you would receive tailored debt advice on what your debt repayment options may look like.

This is a common question that homeowners ask when they approach us for Debt Advice, and the answer in most cases is yes.

In a Trust Deed, your mortgage and car are protected so that you would continue paying them as normal – subject to approval, and completion.

If your house or car were at risk as a result of entering into a Trust Deed, we would look at the Debt Arrangement Scheme.

People sometimes worry that they will be chased for payments after their Trust Deed has been protected, However, once you enter into a Trust Deed, your creditors will be required to direct any contact to your Trustee, rather than to you personally.

A Protected Trust Deed uses formal legislation, meaning your creditors are legally bound not to contact you for any payments, as the payments for your debt will now come from your Trust Deed contributions.

If in the rare instance that you are in a Trust Deed and a creditor who is included in this agreement makes contact with you, you would refuse to engage in any conversation with them and simply refer them to your Trustee. Don’t worry about this, your Trustee will reiterate the terms of the trust deed to the people you owe money to at any given time.

It’s not uncommon for debts to be sold onto other companies, and the new lender may write to you to inform you of this process. On any such occasion, it is merely for informational purposes only and your Trustee will deal with this transfer on your behalf. All you need to focus on is repaying your agreed contribution as normal.

With our insolvency industry experience, a fantastic rate of over 99% of our Trust Deed proposals are accepted.

If a creditor wanted to object, it would do so in writing within five weeks of your Trust Deed being proposed. Even then, it would only fail if that creditor represented over 33% in the total debt value or over one half in number. If 67% agree with the proposal, then the other creditors will still be legally bound by its terms, even if they object.

In the unlikely event that your Trust Deed did fail, your Trustee would negotiate your case in an attempt to have it accepted.

Remember other Scottish debt solutions such as the Debt Arrangement Scheme (DAS) and Sequestration can also be available.

Entering into Trust Deeds will not affect your partner or spouse unless you have joint debt together.

When you sign a credit agreement, because you have done so in your own name; your spouse or partner is not responsible to pay your debts. If you start a Trust Deed, your partner or spouse will not be directly involved with the agreement.

They will not be forced to help you repay your debt and your creditors are forbidden from revealing details of the debt to your partner/spouse unless given clear permission to do so by you.

If you’re a homeowner and your property is worth more than the amount owed on your mortgage, you may have to release some of its equity in order to proceed with a Trust Deed.

Mortgage equity is the difference in monetary value between what you owe on your mortgage and the current value of your property.  The equity value is fixed at the start of your Trust Deed, so if the value of the property should go up, it doesn’t affect the conditions of your Trust Deed.

Where you have negative equity or a low level of equity, a threshold is set where the equity figure can be ignored.

If there is significant equity in your home, you’ll agree with the Trustee how to deal with this in advance. You may, for example, extend the Trust Deed term from 48 months to 60 months.

Where you have a large amount of equity in your home and a Trust Deed is not your best option – the Debt Arrangement Scheme may be more suitable for you, as equity in your home is irrelevant.

Your advisor will discuss this with you, and if necessary, any equity arrangements will be organised before entering into a Trust Deed.

No setup fees are involved in setting up a Trust Deed. All administration fees are included in your monthly payments:

1. 1) A fixed administration fee
2. 2) A fee based on how much debt you pay during your trust deed term

These are charged against the money you owe creditors, so will be agreed between you and your creditors at the start.

Your Trust Deed monthly payments are calculated using your disposable income. Your disposable income is a figure based on a deduction of your essential living costs and offsetting this against your income. The amount left over is the amount of money that you have left to pay your creditors.

When you apply for a Trust Deed in Scotland or Debt Payment Programme, under the Debt Arrangement Scheme (DAS) your essential living costs include your priority debts such as your mortgage, or rent commitments and other priorities such as utility bills and council tax.

Allowances are given for childcare, travel expenses, car finance and other essential expenditures are included such as food and even lifestyle costs such as haircuts and hobbies.

Entering into Trust Deeds or any other formal debt solution means that your monthly outgoings caused by unaffordable debt are significantly reduced, your new Trust Deed monthly payments are calculated fairly, alleviating the stress caused by debt.

The governing body for Trust Deeds is known as the Accountant in Bankruptcy (AiB). The AiB supervises all Trust Deeds however each Insolvency Practitioner is licensed by their own regulatory body.

Our Insolvency Practitioners are regulated by the Insolvency Practitioners Association.

The main purpose of a Protected Trust Deed is to provide a solution to problem debt for Scottish residents.

The advantages of Protected Trust Deeds includes being able to write off an element of your unaffordable debt and the ability to reduce your monthly debt payments to a more affordable amount.

Trust Deeds last a typical duration of 48 months, and once protected creditor contact will reduce and then eventually stop.

The disadvantages of entering into a Trust Deed includes the effect it will have on your long term credit history.

In order to establish if a Trust Deed or any other formal Scottish debt solution is right for you, we would advise that you first speak to an experienced debt adviser which will allow you to understand your options and have all pros and cons explained to you.

You may find that an alternative solution such as the Debt Arrangement Scheme (DAS) is more relevant for you, based on your own individual circumstances.

The Debt Arrangement Scheme (DAS) is not a formal insolvency procedure. The Debt Arrangement Scheme is a structured Debt Payment Programme (DPP) that helps people in Scotland pay off their unaffordable debts in a more affordable way.

The debts included in a DPP will not be written off like they are with other formal Scottish insolvency processes such as Protected Trust Deeds and Sequestration.

However, many of the advantages are shared including interest and charges being frozen, enabling more time for the individual to back their debts in a reasonable time.