Protected Trust Deeds

How A Protected Trust Deed Can Write off Your Debts

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Understanding Protected Trust Deeds

People in Scotland can benefit from a unique solution to serious debt problems, which is not available in other countries, even within the UK. For people who are in severe financial circumstances and perhaps considering bankruptcy, there is an alternative in Scotland called a protected trust deed. The nearest UK equivalent to a protected trust deed in the UK is an individual voluntary arrangement, or IVA.

A trust deed is an option for people whose situation is too serious for a debt management plan to be viable. When the amount of your debts is such that you could never hope to repay them in any reasonable time because you do not have enough income, that is when a protected trust deed can be set up to write off the debts that you cannot afford to pay back.

Benefits of Protected Trust Deeds

They are legally binding and formal arrangements that allow you to make payments of an agreed amount towards your debts for a set period of time, and at the end of that period any remaining debts are written off and you are debt free again. A useful benefit of the formal nature of trust deeds is that if you can get two thirds of your creditors to agree to set up the deed, any other creditors are bound to join in too, even if they do not wish to. The proportion of two thirds relates to the proportion of the debts rather than the number of creditors, so if you had one creditor that you owed two thirds of your debt to, you would only need the agreement of that one person to set the deed up and for all the rest to be bound by it as well.

Another bit of added value and protection through the deed is that your creditors are legally prevented from taking any action against you to recover the money owed. The agreement will also prevent your debts from increasing as interest rates will be frozen from when it is set up.

The main reason that most people would opt for a trust deed rather than file for bankruptcy (sequestration) is that when you become bankrupt you lose control over all your assets, which of course includes your house. It is far less likely that you will lose your home when you use a trust deed. Neither are you prevented from holding certain positions and professions in the way that you are when you are bankrupt.

Another thing that people dread about bankruptcy is the stigma and shame that comes with it. Part of the bankruptcy procedure is that the fact of your bankruptcy being published in the press. There is no need to do anything like this with protected trust deeds, which you can keep as private as you wish.

We have mentioned that the nearest UK equivalent to this debt solution is the IVA, which works on the same principle but normally lasts for five years. A trust deed only lasts for three years, so you are free from debt much faster than you would be if you lived in another part of the UK.

Possible Drawbacks Of Protected Trust Deeds

You should bear in mind that the formality and legally binding nature of these agreements does mean that you are not as free to change your mind about the arrangements, as you would be with an informal debt arrangement such as a debt management plan. If you think there is a good chance that your situation may change in the near future and you might come into money, you may wish to be careful about entering into an agreement like this. You cannot simply cancel the agreement if you change your mind. You need to have very good reasons. If you did come into money while a trust deed was in place, you would almost certainly be expected to use at least a portion of that money to pay your creditors.

Will My Creditors Agree To A Protected Trust Deed?

An arrangement like this one means that your creditors will invariably end up being paid only a fraction of what you owe them. They are not stupid, so are unlikely to agree to this unless they can see that whatever they get through the deed is probably going to be the most they are going to see of their money. Your creditors will not agree if they believe that you actually have plenty of money but just want to see if you can avoid paying it. You need to be able to demonstrate the serious nature of your situation and provide evidence that you are truly unable to repay what you owe, and that if they do not agree to the proposal, you will probably have to declare bankruptcy. As that option may leave them with nothing at all, they will probably prefer to at least get something by using a trust deed.

So provided you have a significant amount of unsecured debt to a few different creditors, you live in Scotland and are genuinely struggling to keep up with payments, you should have a good chance of being eligible for this type of arrangement.

Setting Up A Protected Trust Deeds - Recommended Providers

Top Choice - NoDebtNow

NoDebtNow are one of the most reputable debt help organisations in the UK. Because of their unbeatable reputation for honest advice, we have made them our top choice for Trust Deeds, and you can apply direct from this page by completing the Online Form further down this page.

123 Debt Solutions

It is important to take advice from a trusted specialist debt organisation, so that you are given honest and reliable guidance about the options open to you and the most effective debt solution for your particular circumstances. We recommend one of the most well established UK debt companies, 123 Debt Solutions. They provide a range of debt solutions including IVAs and trust deeds. If you use the form on their website, just complete the section relating to IVAs, which covers trust deeds too.

You can find out more about 123 Debt Solutions on the main Debt Management page of this site.

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Advice On Setting Up A Trust Deed