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Protected trust deed (PTD)

A protected trust deed is a debt solution in Scotland. You make affordable payments over four years. After this time, all remaining debts are written off, giving you a fresh start.

Get online debt advice to find out if a trust deed is right for you

  Scotland only. In the rest of the UK, an IVA is a similar solution, but has different benefits, risks and fees associated. We do not charge you for advice, but you make payments to your trustee or insolvency practitioner once your trust deed is in progress.

A protected trust deed is a formal agreement between you and the people you owe money to (creditors). When your trust deed ends, all remaining debts are written off. This means you don't have to pay them back.

It can give you a fresh start if you are finding it hard to pay back what you owe.

With over 30 years' experience offering free debt help, we will work with you to see if a protected trust deed is the right solution for you. We will also consider a wide range of other solutions that could be suitable for your situation.

StepChange Scotland is an organisation that is trusted and authorised to help arrange trust deeds.

Find out more about our free debt advice service in Scotland.

Is a protected trust deed right for me?

Trust deeds are a form of insolvency. Insolvency is a legal process to get your debts written off, which means you will not have to pay them back.

You need to owe at least £5,000 to all your creditors before you can apply for a trust deed.

A 'trustee' will handle your trust deed. They decide what you can afford to pay, and if your assets (items of value) will be sold. They will also speak to your creditors for you.

Your trust deed becomes a protected trust deed if your creditors do not object to it.

You will need agreement from creditors that add up to a third of your total debt balance.

Let's say your total debt balance is £300, split between six different creditors. You would need £100 of this to be agreed to make your trust deed a protected trust deed.

If you owed each creditor £50, you would only need two creditors to agree to make your trust deed protected.

A trust deed usually lasts for four years. When it ends, any leftover money owed is written off.

Trust deeds are only available in Scotland. In the rest of the UK, an individual voluntary arrangement (IVA) is a similar solution, but has different benefits, risks and fees.

A fresh start

When you make your final trust deed payment, usually after four years, the rest of your debts are written off. This means you will be debt free and can start to work on repairing your credit file.

Single monthly payments

You will make one affordable monthly payment to your trust deed, usually over four years. Your trustee will decide how much you can afford to pay.

Protection from creditors

While you are on a trust deed, your creditors cannot add interest and charges to your debts. They also cannot take further action, like court action.

No upfront fees

There are fees involved in a trust deed, but these are deducted from your monthly payments. At StepChange, we do not charge fees for our advice or service.

Your trustee will deal with your creditors

Take the stress out of dealing with debt. When your trust deed begins, a trustee will take over and deal with your creditors for you.

Benefits of trust deeds

  • Pay a single monthly amount. This is based on what you can afford
  • Interest, charges and debt collection will stop. This happens when your trust deed is accepted and given 'protected' status
  • A protected trust deed works for most non-priority (unsecured) debts. Some debts are excluded, like student loans and fines
  • Your debts will be written off. This happens when you make your final payment
  • There are no upfront fees. Trustee payments are taken from your monthly payments
  • Your trustee will deal with your creditors for you. You don't have to worry about speaking to them

Risks of trust deeds

  • Your protected trust deed is kept on the public Register of Insolvencies. It will stay here for at least five years
  • Your trust deed will show on your credit file. It will stay here for six years, and you may find it harder to get credit
  • You may need to sell assets (items of value). Your trustee will decide what will be sold
  • If you do not finish your protected trust deed, your debts will not be written off. Creditors may then backdate interest and charges
  • Creditors may not accept your trust deed. Then they can apply to make you bankrupt
  • Homeowners may be expected to pay some (or all) of their equity towards their debts. The trustee will speak to you about your options
  • Items on hire purchase agreements may be affected. You may have to return them

Ready to find out if a trust deed is right for you?

Use our online debt advice service to find out what options you have for dealing with your debt. Start, pause and pick up again in your own time.

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How can I find out if a protected trust deed is right for me?

  1. To find out if a protected trust deed is right for you, you will need to start by using our online debt help tool
  2. We need to learn more about you to give you advice. Through our online tool, we will ask you for details about yourself and your situation. This includes basic information about you, as well as information about your income, spending and debts. This can be a long process, but you can pause and come back at any time
  3. From the information you gave us, we will give you options on the best ways to deal with your debt. Make sure you read this through before making your choice. You may even be able to apply for debt moratorium. This will give you a break from having to worry about your debts while you get things sorted
  4. If a trust deed is right for you and you choose to go ahead with it, you will need to choose an insolvency practitioner to be your trustee. We will show you some options in your personal action plan
  5. Your trustee will work with you to put your application together. Once it is finished, they will submit it and start managing your creditors

Questions our clients ask us about protected trust deeds

There will be some restrictions placed on you while you are on a protected trust deed.

  • You must tell lenders about your trust deed if you apply to borrow more than £2,000 both alone and with someone else
  • You cannot refuse to work with your trustee
  • You must tell your trustee about any changes to your finances
  • You must make all your agreed payments
  • You cannot hide assets (items of value)
  • You must not break the terms of your protected trust deed

If you break the terms of your protected trust deed, it will fail. You will need to pay back all your debts, and creditors can backdate interest and charges.

Your creditors or your trustee can also apply to make you bankrupt.

A protected trust deed usually runs for four years. It can last longer if:

  • You own a home with equity and do not remortgage within four years
  • You take a payment break during your trust deed

Your trust deed will show on the Register of Insolvencies. This is publicly available online until one year after your trust deed ends.

Your name and address will be listed. Speak to your trustee if you feel you could be at risk.

There are some positions you cannot hold while on a protected trust deed.

This is often when you are in control of other people's money. Things like solicitors and many roles in financial services.

Before you go ahead, find out if there are any risks to your role. You can do this by:

  • Checking your employment contract
  • Speaking to your employer, trade union or professional body

There is a charge for the trustee. The charge comes out of the trust deed fund. It is made up of:

  • Your monthly payments
  • Any assets included
  • Any equity included

It is not recommended to take out more credit while in a trust deed.

  • A trust deed shows on your credit file for six years
  • It shows on the Register of Insolvencies for five years

This may make it harder to get credit.

If your situation changes, your creditors might agree to a lump sum payment covering what you owe.

Your protected trust deed is managed by a 'trustee'.

  • They decide what you can afford to pay
  • They decide whether you should sell assets
  • They contact your creditors
  • They draft your proposals
  • They support you through the whole process

If diligence has not started, no further enforcement action can be taken.

You may have to sell valuable assets. You can usually keep one vehicle worth less than £3,000.

About StepChange Debt Charity Scotland

We help hundreds of thousands of people each year across the UK.

In our Glasgow head office, we have expert teams of advisors who specialise in giving free debt advice to people living in Scotland.

We are an approved organisation for providing advice and managing Scottish debt solutions.

We also campaign on your behalf to make changes to law and policies. We use the real experience of our clients to drive home the need for change. Read our latest 'Scotland in the Red' report.

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We have helped millions of people since 1993.

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