
The Insolvency Group Limited are proud to be a member of the Insolvency Practitioners Association (IPA) Volume Provider Regulation Scheme. The IPA strongly believes that the Volume Provider Regulation Scheme, a first in the insolvency profession, will deliver lasting confidence in the personal debt solutions market.
Launched by the IPA, the Volume Provider Regulation (VPR) Scheme came into effect on 1 January 2019.
The VPR Scheme was rolled out in response to the rapid development of the Individual Voluntary Arrangement (IVA) market – the most commonly used debt solution in England, Wales and Northern Ireland. The Scheme provides some of the closest scrutiny seen in financial services. More information on the Scheme, including the IPA’s Benchmark Report can be found here.
A Protected Trust Deed (PTD) is an agreement, between you and your creditors, that agrees a monthly repayment plan over a fixed period that combines multiple unsecured debts into one affordable, monthly payment. It is a formal, legal debt solution negotiated by an Insolvency Practitioner that both you and your creditors are bound by. The Insolvency Practitioner will deal with your creditors throughout the life of the PTD, freeing you from any stress and worry of dealing with them directly. An PTD is a form of insolvency, but it is different from bankruptcy (Sequestration).
How Does a PTD Work?
If you decide to proceed with a PTD, you will work out a repayment plan with an insolvency practitioner. The repayment plan is presented to your creditors, and upon agreement, you will pay back a set amount each month, usually for four years. Since a PTD proposal is typically a last resort for people who cannot afford their current debt repayments, most creditors recognise you are trying to repay what you owe.
Write Off Debt With an PTD
Entering a PTD may result in a portion of your debt being written based on your circumstances, affordability, and the level of debt. PTDs are suitable for people with a considerable debt level and as such you are only expected to pay back what is reasonably affordable for you on a regular basis.
Benefits of a PTD
- A PTD can protect your owned assets, such as your home, by preventing your creditors from forcing you to sell up to pay them back – subject to you meeting the requirements of the agreed proposal.
- All interest and charges on your unsecured debts, including your credit cards and store cards, are frozen from the date a Trust Deed is signed.
- On approval, any current or potential legal action relating to your unsecured debt is prevented; this also stops late payment charges and fees from being added, giving you the reassurance that your debt has stopped growing. This does not include debts outside the PTD such as Student Loans, fines or secured debts.
Disadvantages of a PTD
- Not all debts can be included in an PTD, for example secured debts, student loans, and court fines but an allowance can be given to enable you to continue repaying these.
- Creditors may not approve your PTD.
- If you become entitled to any windfalls or inheritance during the term of the PTD these may be required to be realised for the benefits of your creditors and to be introduced into the arrangement.
- If you fail to make the payments due under the terms of your PTD, your arrangement could fail, which in turn could lead to you being made bankrupt or not being discharged from your debts and the previously frozen interest and charges being added back on to your balance meaning you may be in a worse position than when you entered the PTD.
Assets
If you have assets, particularly a home or a car, the Insolvency Practitioner will require information about their value as it may be that creditors would require to see sums paid into the PTD in lieu of the value of your assets. Typically, this is carried out by way of an extension of your monthly payments. All such matters would be detailed in full prior to you being required to sign any documents and in the case of your family home, would be subject to a separate formal written agreement.
Are There Fees on an PTD?
Before entering a PTD, you need to be aware that there are fees involved. Should sufficient funds be realised, you may be required to repay your debts in full together with statutory interest and all fees due within the terms of your arrangement.
Will a PTD work for me?
A PTD can be a positive way to manage your debts, however, to be eligible you must:
- Have £5,000 or more of unsecured debt.
- Not rely solely on benefits as your only income.
- Have a steady income and consistently be able to make the assessed contribution towards your PTD.
- Not be a director of a Limited Company (unless permitted by the relevant Articles of Association).
- Live in Scotland.