subject: Are Protected Trust Deeds An Answer To Personal Insolvency? [print this page] A protected Trust Deed is an instrument to help an individual out of an insolvency crisis. It is lesser known than the more popular IVA (Individual Voluntary Arrangement) and runs for approximately three years as opposed to the IVA's five. But many aspects of the two are the same or very similar, and both share exactly the same purpose.
Protected Trust Deeds carry none of the stigma of bankruptcy or sequestration, whose awful aftermath the PTD was set up to avoid. A PTD is a legal document which sets out a repayment schedule and must be approved collectively by all the creditors before it can be put into place. Once it is in place it is binding, and none of the creditors are allowed recourse or access to the debtor client upon enactment of the Deed. Those creditors who choose to ignore this and to pursue the debtor, for whatever reason, will face a stiff penalty under the laws of the land.
You must ensure that you seek the right advice when taking out a Protected Trust Deed, as it is imperative that you stipulate within the contract that your home and personal assets should be included and ring-fenced within the Deed. Failure to do this and take certain other measures may leave you worse off than before. Therefore it is vital that you take impartial and independent advice from a reputable firm. All such instruments must, by law, be drawn up by a qualified Insolvency Practitioner, so this is a much more serious arrangement than something like a so-called debt consolidation loan which any old salesman can pitch to you. Insist on appointing a reputable firm of such practitioners from the outset.
There are several advantages of starting a Protected Trust Deed. These include having all interest and any added charges frozen on credit accounts that may be in debit, and also all legal action (and any collection or enforcement activity associated with it) must stop according to the terms of the Deed.
During the time that the Deed is in force your income and expenditure will have to be watched closely, as it will be assumed that income will be greater than expenditure. It is for this reason that people who use such an instrument as a PTD are both in paid employment and have household bills which are at least manageable. When making such an undertaking the client must maintain the ability to sustain all repayments of the Deed over all 36 months that it is in force.
by: Gordon Goodfellow
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