First of all, what is a Protected Trust Deed? Quite simply a Trust Deed is a legally binding agreement between a debtor and their creditors to repay as much as they can afford toward their unsecured debts over a 3 year period. It is a way of avoiding bankruptcy and preventing legal action, if proceedings have not already been initiated.

If a debtor has a disposable monthly income over a 3 year period that equates to a minimum of £150.00 or 10% of their total debt, they can offer to enter into a Trust Deed. If they are homeowners with more than a minimal amount of equity in their property, they will also have to try and raise some or all of it to pay into the Trust Deed.

The proposal has to be drafted by an Insolvency Practitioner (I.P.) and put to the creditors who then have the chance to accept or reject it. If sufficient numbers agree to the terms (or fail to object) within a 6 week period, the Trust Deed becomes Protected, which means it is legally binding. After this stage, as long as the payments are maintained the creditors may not add interest or charges to the accounts, take any form of legal action against the debtor or even contact them in relation to the debts.

Protected Trust Deeds therefore are a very good way for debtors to absolve themselves of their debts while maintaining an affordable payment to the creditors. The Protected Trust Deed does not carry the same stigma as a bankruptcy, nor does it affect the debtors’ credit rating in the same way.

For the creditor it means they are recovering some of the money owed and generally this is a far greater sum than through the bankruptcy. For information or advice relating to Protected Trust Deeds, contact Best Solution on 08000 933 66 66


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