A Protected Trust Deed for Debt Resolution
There are some words or phrases that are ambiguous or unclear, such as the word protected in the phrase protected trust deed. What makes it “protected” and how is it different from “unprotected” or simply a standard trust deed? In essence, it is an agreement or contract in which you show that you have sufficient assets and income to support a repayment plan of your debts. These assets and income are shown by you to your assigned Insolvency Practitioner (IP) who is a trained accountant or member of the legal field. The IP will then show this to your creditors. Assuming that they approve your repayment plan, you are then protected from sequestration or bankruptcy. If the plan is not approved then modifications can be made until it is approved. This is available to people in Scotland who have been residents of the country for at least 6 months prior to application.
This is spelt out in the following four steps in getting a Protected Trust Deed, which is also called a Scottish Trust Deed, and is available through debtadvisoryscotland.
Applying for an interim order through the court. If you are in dire financial straits then your creditors may be forcing the issue by issuing bankruptcy or sequestration orders through the court. Once you begin the process of applying for a Protected Trust Deed, then your IP can issue an interim order, keeping you out of the more adverse bankruptcy procedure. However, this is rarely done, and a simpler court adjournment is almost always sufficient to eliminate such proceedings.
An analysis of your finances, income and repayment possibilities. Homes and vehicles are usually included to show that you have enough worth to pay back what you can during the stipulated amount of time. This is especially pertinent in terms of homes in which you have enough equity–the difference in the amounts of the value and debts of the home. For example if your home is worth £200,000 and you owe £150,000 on it, then you have £50,000 in equity. However, every person, asset and situation is different. If you have a vehicle that you must have in order to continue getting income then your IP may recommend that the vehicle not be placed in the Protected Trust Deed. You do need to be as mutually beneficial as possible. If you owe a creditor £10,000 and you offer to pay back just £2,000 then that creditor will probably reject that offer, and possibly affecting your entire agreement.
Creation of a proposed agreement and report. This will contain the full financial statement which will specify all of your pertinent assets, properties, income and debts, as well as all of the “legalese”. Perhaps more importantly and beneficially, it will provide the reasons why your creditors ought to agree to the Protected Trust Deed and to not take their chances with your sequestration.
The creditors will agree to or reject your proposed plan. This is done at a meeting at the office of the IP. Although you will not have to deal with the creditors after the agreement is in force, you ought to attend the meeting in person so that you can plead your case when necessary. However, a teleconference is a viable option. Not all of the creditors have to agree to the Protected Trust Agreement–only those who hold a majority of the obligations. If they approve the contract then the contract becomes legally binding, even upon those creditors who rejected the proposal.
The very first step, of course, is to contact us at Debt Advisory Scotland. The sooner that you do this, the sooner you will be protected and the sooner you can return to a productive life.