Protected Trust Deeds

Overview

Where you live in the United Kingdom determines the debt solutions that are available to you. There are different debt solutions for the various parts of the United Kingdom: this is based on separate legal systems and legislation.

An Individual Voluntary Arrangement or IVA applies to England, Wales and Northern Ireland, but people in Scotland cannot enter an IVA.  In Scotland, there is a similar Scottish debt solution called a Protected Trust Deed.

There are other key differences between a Protected Trust Deed and an IVA (apart from where someone lives and the legal system in that part of the UK).

Differences

• A Protected Trust Deed is typically a 4 year debt solution; an IVA lasts for 5 years
• You can enter a joint IVA (as husband and wife), but the Scottish Trust Deed does not allow for this and requires two separate Trust Deeds (or one Trust Deed and another debt solution)
• You can enter a Protected Trust Deed in Scotland with £5,000 or more of unsecured debt; to enter an IVA, the threshold is £7,000 of unsecured debt

Finishing your Protected Trust Deed is a chance to start afresh and build on your success. 

One of the first things to do is to check that your credit file has been updated to reflect the fact that you have met all your obligations under the Protected Trust Deed. 

Creditors who were included in the Trust Deed will have registered a default on your credit file. 

You should check that any default has been registered no later than the start of the Trust Deed itself; registering a default after that date is not permitted.

You should also check that all creditors contained in your Trust Deed have marked the debts as having been settled in full.  They should do this as a matter of course, but if they have not done this after a period of 3 months from your final payment, then you should write to them individually to ask them to amend your credit file.

While the last thing that you will be thinking of is taking out more credit, it is still a good idea to start thinking about rebuilding your credit rating.

This is needed for everything from getting the best mobile phone contract, right through to buying a new car or even getting another mortgage.

Other key things include:

• Continuing to meet any repayments relating to financial obligations that you may have (which were not included in the Trust Deed)
• Staying within agreed overdraft limits on any current account(s)
• Remaining in credit (if possible) in your current account(s)

In time, you might want to consider applying for a credit card that you pay off in full each month, and without paying any interest at all. 

You could use this for small items of expenditure – again with the proviso that you always pay off the amount in full each month. 

In sound financial management terms, it’s also a good idea to build up a contingency fund.

This will allow you to meet any unexpected expenses that you might incur.

Such as repairs to the car, or central heating system for example.

The contingency fund is a great way of demonstrating financial responsibility and acumen to potential creditors and lenders – thereby improving your credit rating.

One thing’s for sure though – the future may be brighter again at the end of a Protected Trust Deed.