The Scottish Protected Trust Deed is a situation which is very similar to the IVA (Individual Voluntary Arrangement) option available to those in England and Wales. However, legally are near identical in that they are an agreement between creditors and an individual to pay off debts at a set monthly rate which is directly linked to how much the individual can afford.
On average, Protected Trust Deeds tend to last between three and five years during which time the individual involved will have paid off a set amount, based upon their ability to pay. At the end of the life of the Protected Trust Deed the remaining debt is then written off and the individual is released from their monthly payments. It is highly likely that their credit rating will have been impacted by the Protected Trust Deed although overtime it is possible to rebuild and improve your credit rating.
Setting up a Protected Trust Deed
The first stage in setting up a Protected Trust Deed is for the trustees and the individual to compile a list of creditors, monies owed and their own ability to pay. The trustees would then put forward a proposal to the individual’s creditors suggesting an arrangement whereby part of their debt is repaid. The Protected Trust Deed would be granted if two thirds or more of the creditors (by value) agree to the proposal, at which point interest is frozen and payments will commence.
Co-operating with your trustee
After setting up your Protected Trust Deed you are then obliged to :-
Co-operate with your trustees at all times.
Commit to paying off the agreed monthly contribution figure.
Refrain from taking any more credit.
Advise the trustees of any significant change in your financial circumstances or any financial windfalls.
If you break any terms of the Protected Trust of Deed this may impinge upon your outstanding debts and could result in further action by your creditors.
