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Protected trust deeds help households in Scotland that cannot afford to repay their unsecured debts to wipe the financial slate clean and to start again.
The deed is a special debt arrangement that only a licensed insolvency practitioner can set up and administer under the Protected Trust Deed (Scotland) Regulations.
The insolvency practitioner, is generally a lawyer, accountant or other finance professional.
The body issuing the license regulates the work of an insolvency practitioner by providing a code of ethics and conduct. The regulator also offers consumers redress for bad practice through a complaints procedure.
Qualifying for a trust deed
At HJS Recovery we follow four main qualifying rules:
- The borrower named in the deed must live in Scotland
- The total debt must add up to less than the equity in the borrower’s home, if they are a homeowner
- Only unsecured debt can be included
- The money must be owed to two or more lenders
We ensure that these four basic tests are met before setting up the deed.
Setting up a protected trust deed
As an additional protection for consumers, the Accountant in Bankruptcy (AiB) supervises and audits protected trust deeds. The trustee must notify the AiB that the deed is running so the details can be placed on the Register of Insolvencies.
The AiB can also investigate complaints against trustees.
Before someone signs a trust deed, the trustee - the insolvency practitioner - must explain any alternative debt management schemes and the consequences of signing the deed.
The trustee must hand the consumer a copy of the Scottish Government’s Debt Advice and Information Package.
It’s also the trustee’s job to draft the legal documents that make up the trust deed and then write to the creditors with a view to protecting the arrangement.
What does the trustee do?
A protected trust deed is a binding legal agreement for the borrower and their lenders.
The trustee’s job is to set up the trust deed and then to make sure everything runs smoothly, by monitoring the borrower’s financial status and by collecting and dispersing the monthly payments.
Failing to work with the trustee
If the borrower does not co-operate with the trustee or keep to the terms of the agreement, the consequences can be serious.
The trustee has the power not to discharge the borrower from their debts. The trustee has to give the reasons in writing and the borrower can appeal the decision in the sheriff’s court.
In extreme circumstances, the trustee can ask a court to declare the borrower bankrupt.
The creditors can also complain to the AiB, the trustee’s regulatory body or a court if they believe the trustee has made some inappropriate decisions.
Impartial and independent advice
Dealing with debt under a trust deed offers great peace of mind to a borrower as they know that after 36 months, they will have finished paying their unsecured debts and any remaining balances will be written off.
A protected trust deed not only gives the borrower legal protection against action from creditors, but offers impartial and independent advice from an insolvency professional.
HJS Recovery helped me sort out my crippling debt problems with both professionalism and kindness. Never judgemental, they agreed a repayment with my creditors that I could afford and now I am completely debt free.
Mr B from Bournemouth
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Registered in England No. OC364606
Registered in England No. OC364606
