Protected trust deed (PTD)

If you owe more than £5,000, a PTD can offer you a fresh start.

A protected trust deed (PTD) is a formal agreement between you and the people you owe money to. Also called your creditors.

In a PTD, you pay what you can afford towards your debts.

Once complete, the rest of the debt is written off. This means you do not pay it all back.

If you enter into a PTD, you will be insolvent.

Your PTD is handled by an insolvency practitioner (IP).

The IP decides what you can afford to pay and whether your assets (items of value) will be sold.

Your IP contacts your creditors.

Your trust deed becomes a protected trust deed (PTD) as long as your creditors do not object to it.

• Creditors cannot contact you once the PTD is accepted.
• Creditors cannot add interest once the PTD is accepted.
• You are legally protected from further action.

A PTD usually runs for four years.

When finished, any leftover money owed is written off.

StepChange Scotland is an organisation that’s trusted and authorised to help arrange trust deeds.

Benefits of trust deeds

• You pay a single monthly amount based on what you can afford
• Interest, charges and debt collection stop when your PTD is accepted
• A PTD includes most of your non-priority or unsecured debts. Some debts, like student loans and fines, cannot be included
• Once you make your final payment, the rest of your debts are written off

Risks of trust deeds

• Your PTD is kept on the public Register of Insolvencies for at least five years
• It is on your credit file for six years
• It may be harder to get credit
• Your may need to sell assets (items of value)
• You may have to sell any asset worth over £1,000. Like a vehicle
• If you own property, you may need to pay some or all of your equity towards your debts
• Items on hire purchase agreements can be affected by the PTD. You may have to return them

Important information about protected trust deeds

You need to know how your assets, home and job could be affected by the PTD.

Your IP will work out how much you need for essential spending and what you can afford towards your debts.

It is important to be open and honest with them.

Conditions of your PTD

There are some restrictions during a PTD:

• If you apply to borrow more than £2,000, alone or with someone else, you must tell the lender about your PTD
• You must work with your IP. You cannot refuse
• You must tell your IP about any changes to your finances
• You must make all your agreed payments

You must not:

• Hide assets (items of value)
• Break the terms of your PTD

If you break the terms of the PTD:

• It will fail
• You need to pay back all your debts
• You need to pay interest and charges
• Your creditors or your IP could apply to make you bankrupt

Your PTD could be extended

A PTD usually runs for four years. But it can last longer if:

• You own a home with equity and do not remortgage within four years
• You take a payment break during your PTD

Your PTD will be kept on a public register

Your PTD will be on the Register of Insolvencies.

This is publicly available online until one year after your PTD finishes.

Your name and address will be listed. Speak to your IP if you feel you could be at risk.

Protected trust deeds and your job

There are some positions you cannot hold when you are in a PTD.

This is often when you are in control of other people’s money. Things like solicitors and many roles in financial services.

Before you go ahead, find out if there are any risks to your role. You can do this by:

• Checking your employment contract
• Speaking to your employer, trade union or professional body

What fees are involved?

There is a charge for the insolvency practitioner (IP).

The charge comes out of the trust deed fund.

This is the total amount of money you are able to offer your creditors

It is made up of:

• Your monthly payments
• Any assets included
• Any equity included

Video: What is a protected trust deed?