Invocas Financial

A Protected Trust Deed is a legally binding contract between your creditors and you where you agree to make a regular contribution from your income and to surrender certain valuable assets to your Trustee.

The Trustee negotiates with your creditors on your behalf and pays them an agreed proportion of the amount you owe them. It's an alternative to sequestration (the Scottish equivalent to bankruptcy) and is administrated by a licensed Insolvency Practitioner.

The terms of your proposal to creditors can be flexible, but creditors will reasonably expect their prospects of recovering money under a Trust Deed to be at least as good as with sequestration proceedings.

The benefits of a Trust Deed are:

• All pressure from creditors is removed as your Trustee handles all correspondence from them on your behalf
• You will only repay what you can reasonably afford after living expenses have been deducted
• After completing a Trust Deed, which normally takes 3 years, you will be debt-free from the debts that were included in your Protected Trust Deed and ready to start afresh financially

During the negotiations with your creditors, fees will be agreed. You will be informed of the fees your Trustee will receive before you commit to a Protected Trust Deed.

You then make monthly contributions and create a pot of cash for your creditors. Your Trustee will take their fees from the pot - you do not receive a bill at any stage, you just pay the contributions you can afford.

Please visit our important information page for further details on Protected Trust Deed fees.

To succeed, the following guidelines would normally be expected:

• you owe at least £7,500 of unsecured debt to a minimum of 2 different creditors
• you must be in paid secured employment (Employed / Self Employed)
• you must be able to afford a consistent monthly contribution

If you sign a Protected Trust Deed, you will be transferring all of your valuable assets to a Trustee. Assets may include any equity in your home, cars, investments or any other significant assets.

Once you sign a Trust Deed, your Trustee will place an advert in the Edinburgh Gazette. This publication is subscribed to by solicitors, accountants, banks and various other institutions and your creditors will have 5 weeks to object to the terms proposed by your Trustee.

Provided that no more than one third in value or a majority number of your creditors object to the terms proposed, the Trust Deed will become "Protected" and your creditors can then no longer pursue you for money you owe to them. Neither can they take another legal debt recovery action.

The initial signing of a Trust Deed can be completed within a couple of days. After a telephone consultation, a home visit will usually be arranged to go through exactly what you have to do. At this point, you are under no obligation to sign and if you change your mind we can advise you on an alternative solution.

After you have signed the Trust Deed, it takes around 6 weeks for the creditors to accept the proposal.

A Protected Trust Deed normally lasts for 3 - 4 years.

Once you have signed a Trust Deed, your proposal will be sent to all your creditors and they are given approximately 5 weeks to agree or object to the proposal. If your creditors agree to the proposal (no response is accepted as agreement), the Trust Deed becomes "Protected" and at this point you have complete protection from your creditors.

The only interest the Trustee will probably take in your home is in any equity available to you. A valuation of the property will be carried out, and the level of any equity established.

Again, in terms of your vehicles, the Trustee's interest will only be in any equity. If it is subject to a hire purchase agreement, only the difference between the value of the car and the outstanding hire purchase amount will be required to be contributed to the Trust Deed.

If you need your car to travel to and from work, you will normally be allowed to retain it and continue to make payments to the company you have your hire purchase agreement with.

You should not bank with a creditor that you owe money to because the creditor is entitled to offset any credit balance on your account against money you owe them. It is important you arrange for your salary to be paid into your new account so that your creditor does not take the credit balance from your account when your salary is paid in.

It is also recommended that you do not operate an overdraft.

This is at your discretion. If you can afford to make a nominal sum to your creditors, you can do so. However, if you cannot afford a payment, explain to the creditor that you are in the process of signing a Trust Deed and ask them to put your account on hold for 7 days.

Yes, this is likely. Creditors can take a while to update their systems with details of the Trust Deed. Your creditors will be contacted as soon as your Trust Deed is advertised in the Edinburgh Gazette, however, let your Trustee know about any calls or correspondence from them.

There is no need for your employer to know that you have signed a Trust Deed. However, in extreme cases, if you do not adhere to the terms and conditions of your Trust Deed and make your monthly repayments as agreed, your Trustee may contact your employer.

Your employer may be contacted if, for any reason, your Trustee cannot contact you at your home address so it is very important you keep them updated with any changes to your contact details.

There is no specific reason that your partner needs to find out about your Trust Deed. However, if there are joint assets e.g. equity in a jointly owned property, it is likely your partner will find out about the Trust Deed as it would require their agreement and signature.

All money won or inherited should be declared to your Trustee. If there are sufficient funds to repay all creditors in full plus interest, plus pay your Trustee's fees, your Trustee will arrange for this to happen and the remainder will then be returned to you.

The Trust Deed itself is not noted on your credit file, however, if you are ready to sign a Trust Deed, your credit file presumably already has a default notice. Any default notices will stay on your credit record for six years and after that, your creditors should mark the debts as being satisfied.

Take the first step to turning your debt around. Complete our online debt enquiry form and we will advise whether we can help you with a debt solution and arrange a time to contact you to talk through the options.