Everything you need to know about PTDs

Our PTD pages will explain all you need to know and what you need to consider when thinking about a Protected Trust Deed.

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What is a PTD?

A Protected Trust Deed (PTD) is a legally binding arrangement between you and your creditors which is only available to Scottish residents.  You agree to make an affordable payment each month over an agreed period of time (usually lasting four years).

Upon successful completion of the PTD, any debts included within the PTD will be written off.

How does a PTD work?

There are two stages in the life of a Protected Trust Deed – protected and not protected. While your application for a Protected Trust Deed is reviewed it remains ‘unprotected’ (or just a Trust Deed) – this means creditors can still pursue you for outstanding debts. Once the Trust Deed has been protected creditors included in the PTD cannot chase you for payments.

We will review your personal and financial circumstances to identify the best solution and advice for you. If entering a PTD is the best advice for you, we will prepare your case for an Insolvency Practitioner. A PTD must be arranged by a licensed Insolvency Practitioner who will become your Trustee (an individual who takes responsibility for your financial affairs). The Insolvency Practitioner will prepare and present your case to your eligible creditors.  If there are no significant objections (more than 33% by debt value or 50% in number) the Trust Deed will become protected.

Once a Trust Deed becomes protected any unsecured creditors included within it cannot take legal action against you to recover debts. You must maintain the monthly contributions agreed in the PTD.

How do I qualify for a PTD?

PTDs are only available to Scottish residents.  You must owe at least £5,000 worth of unsecured debts. A PTD also requires an affordable monthly contribution to pay back creditors over the course of the PTD.

You will not qualify for a PTD if your income is made up entirely of benefits.

Is a PTD right for me?

There may be consequences for entering into a PTD. These include:

  • A PTD will impact your credit rating for six years following the signing of the Trust Deed.
  • If you fail to maintain contributions or fulfil your obligations in relation to the PTD, the Trustee may apply for your sequestration.
  • Your Trustee controls any assets you have, other than household essentials, these assets may be sold to raise funds for creditors. This will be discussed with you following a full review of your financial circumstances.
  • Homeowners may be asked to release equity in their home as part of the PTD by re-mortgaging. Some debts are excluded from a PTD. Excluded debts include student loans, Magistrate court fines, criminal fines (includes debts obtained under the Proceeds of Crime Act), debts from fraudulent activity, damage or personal injury claims made against you and social fund loans.
  • Debts that are not part of the PTD must still be managed by you.
  • If your financial circumstances improve your monthly payments could increase.

PTD FAQs

All the answers you may need about PTDs can be found here. Although this may help you understand more about a PTD we strongly advise that you seek financial advice before entering in to any agreement – even if it isn’t from us. But we’re always happy to help.

What if my personal circumstances change during a PTD?

You will need to inform the Trustee as soon as possible about any change of circumstances.  

PTD costs

There are fees charged by the Trustee for a PTD. There are two types of fees; Initial Trustee fee and a realisation fee (percentage of the amount that is paid in to the PTD). In addition there are also related costs which are called disbursements. These include legal registration costs.

The fees will be deducted from your monthly payments. The amount you pay is based on affordability after your essential expenditure has been considered in line with the Common Financial Statement.

How does a PTD affect my credit report?

A PTD will adverse affect your credit file and your ability to obtain future credit. A PTD will stay on your credit report for six years from the date it is agreed.

How long does a PTD last?

A PTD usually lasts four years. It may last longer than this if you miss payments or you purchase back your interest in any assets that form part of the PTD. If you’re a homeowner then you may be required to release equity in your home by remortgaging.

What debts are excluded from a PTD?

Generally, unsecured debts can normally be included in a PTD. The following details debts which are excluded from a PTD. These include student loans, money owed to someone who holds a security on your property (e.g. a mortgage or secured loan), debts incurred through fraudulent activity, hire purchases and fines.

What happens to my creditors through a PTD?

When setting up a PTD your creditors can either agree or object once details to apply for it have been made publicly available. Once agreed any contact is usually managed by a Trustee. If you don’t follow the terms of the PTD then it may either be terminated or the Trustee can apply for your sequestration – or bankruptcy. Should the Trust Deed be terminated you will be liable for your outstanding unsecured debts and your creditors will be free to contact you directly.

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