Protected Trust Deed (PTD)
A trust deed is a formal agreement between you and your creditors where you make reduced payments to your debts.
What is a Trust Deed?
It is designed to help people with unaffordable debts of at least £5,000 and needs to be set up with the help of an Insolvency Practitioner who will charge fees to set up and supervise the PTD, however these fees will usually be included within the monthly payment which you make. The Insolvency Practitioner will write to your creditors and ask them to agree to the trust deed. Your trust deed will then become protected if a sufficient proportion of creditors agree to it.
The agreement usually lasts for four years and once it’s completed, any unsecured debts included will be written off. Trust deeds are not available if you live in England, Wales, or Northern Ireland. In these countries, IVA is a similar solution.
During your Trust Deed, you will continue to pay your bills and other important living costs and make a payment into your trust deed towards your unsecured debts. Your creditors will expect you to pay in as much as you realistically can afford, so may want you to cut back on expenditure in some areas.
Benefits of a Trust Deed
- The solutions last for a fixed period of time, usually 4 years
- Interest and Charges will be frozen once the Trust Deed is protected
- After successful completion any remaining debt included in the arrangement will be written off
- Creditor contact will stop once the Trust Deed is accepted
Considerations of a Trust Deed
- Once your PTD is approved you are bound by formal insolvency proceedings and your credit rating will be affected
- Failure of a PTD could result in bankruptcy
- A re-mortgage may be required if you are a homeowner and if you cannot re-mortgage the PTD may be extended
- Your details will be recorded on the register of insolvencies
- There are fees applicable to an PTD. These include a single, fixed, upfront fee, typically around £2500 plus a percentage of the assets that the insolvency practitioner gathers as part of the running of the trust deed.