Protected Trust Deed
A trust deed is a Scottish formal debt solution and can be voluntary or protected.
In a voluntary trust deed, an agreement is made between a debtor and their creditors to repay part, or all of what they owe. Under a voluntary trust deed, the debtor’s rights to the things they own are transferred to a trustee who will sell them to pay creditors part of what is owed to them. However, a voluntary trust deed is not binding on creditors.
If creditors agree to the terms of a trust deed, it then becomes protected. A protected trust deed is a special kind of trust deed that is binding on all creditors and means they can take no further action to pursue you to make the debtor bankrupt, as long as the debtor complies with the terms of the protected trust deed. Signing a trust deed is a serious step and you must be sure that you understand what you are signing.
Voluntary trust deed
A voluntary trust deed is an agreement made between a debtor and their creditors to repay part or all of what they owe. A trust deed transfers your rights to the things you own to a trustee who will sell them to pay creditors part of what is owed to them. A trust deed will normally include a contribution from income for a set period. This is usually 48 months but can vary. A voluntary trust deed is not binding on creditors unless they agree to its terms, which means it then becomes protected. Trust deeds should only be agreed upon if there is an intention to have the terms presented to creditors for protection
Protected trust deed
A protected trust deed is a special kind of trust deed that is binding on all creditors. Provided the debtor complies with the terms of their protected trust deed, creditors can take no further action to pursue the debts or to file for bankruptcy. A protected trust deed prevents the debtor from applying for their own bankruptcy or take part in the Debt Arrangement Scheme. If you acquire any new debts after you sign the trust deed, they will not be protected from action by the new creditors. There is a £5000 minimum level of debt before a trust deed can become protected.