Protected Trust Deeds

The Scottish Government announced today via the press release below that they are to introduce regulations in Parliament in connection with Protected Trust Deeds:

'New regulations will help improve the transparency of and address the high costs and disappointing returns to creditors associated with Protected Trust Deeds.

These changes will help ensure that only those with more serious debts apply for this insolvency solution and provide transparency about how much of the contributions they will pay will be returned to creditors.

Over recent years, the Scottish Government has had concerns about the performance of PTDs – because more than a third of all PTDs pay no dividend at all to creditors.  

Minister for Enterprise, Energy and Tourism, Fergus Ewing said: “These changes will address the two main problems associated with Protected Trust Deeds - rising costs and disappointing returns to creditors. Protected Trust Deeds will not serve as a sustainable debt relief solution for either creditors or debtors if more than half of all of the receipts are spent on costs. I am pleased that we have been able to make these changes and I look forward to them coming into force.”

The Scottish Government has developed these changes by drawing on responses to its consultation exercises and other feedback from stakeholders. The new regulations which improve information provided to creditors will:

  • Introduce a minimum debt level of £5,000.
  • Make a trust deed ineligible to be protected if the debtor’s total debts can be repaid, in full, within a 48 month period.
  • Exclude pre-trust deed fees, such as fact-finding fees, so that these can no-longer be charged separately and will be treated the same as other debts.
  • Change the way trustees levy their fees. Trustees will no longer be able to charge their fees at an hourly rate - they will be required to charge a single, fixed upfront fee augmented by a    percentage of funds ingathered.
  • Ensure that creditors are notified of the level of fees that the trustee will charge before they are asked to agree to the trust deed.  
  • Ensure that creditors are asked to approve any increase to the trustee’s fixed fee
  • Ensure that no contributions can be paid from a debtor’s social security benefits'.