A Trust Deed is a formal debt solution. It can be voluntary or protected.
Voluntary Trust Deed
In a voluntary trust deed an agreement is made between a debtor and their creditors to repay part, or all of what they owe. A trust deed transfers the debtors rights to the things that they own to a trustee who will sell them to pay creditors part of what is owed to them. A trust deed will normally include a contribution from income for a set period, this is usually 48 months but can vary.
The trustee must be a qualified insolvency practitioner. Insolvency practitioners are regulated by law and must be members of an approved governing body. Independent Insolvency Practitioners fees are at their own and their licensing authority's discretion.
A voluntary trust deed is not binding on creditors unless they agree to its terms and it then becomes protected. Trust deeds should only be agreed if there is an intention to have the terms presented to creditors for protection.
Protected Trust Deed
A Protected Trust Deed is a special kind of trust deed that is binding on all creditors. Provided the debtor complies with the terms of their Protected Trust Deed, the creditors can take no further action to pursue the debt or to make the debtor bankrupt.
A Protected Trust Deed prevents the debtor from applying for their own bankruptcy or for a debt payment programme under the Debt Arrangement Scheme.
If a debtor acquires any new debts after they sign the trust deed, they will not be protected from action by their new creditors. You must have debts of at least £5,000 for a trust deed to become protected.
Debt Arrangement Scheme (DAS)
DAS gives debtors the protection from the threat of any legal action and all interest, fees and charges are frozen and are written off at the end of their Debt Payment Programme. All debts must be included in a Debt Payment Programme, including rent and mortgage arrears. However, a debtor must keep up with their ongoing bills, including rent or mortgage payments.
Under DAS, a debtor commits to a Debt Payment Programme which allows them to repay their debts based on their disposable income. A debtor must seek advice and assistance from a money advisor before applying for such a programme under DAS. This payment programme can last for any reasonable length of time, depending on the amount of debt and how much the debtor can pay and creditors will receive regular payments towards the debt. When the money adviser or DAS administrator submits the application to creditors for approval, all interest, fees, penalties or other charges owed are frozen. Debtors are also protected from creditors taking any action against them to recover their debt.
If the debtor applies for approval of a DPP under DAS you will receive a request to consent to that DPP proposal either from the DAS Administrator or a continuing money adviser. The request to consent is designed to give you all the information you need to make a decision to accept or reject the DPP proposal. The request to consent to a DPP proposal will normally be sent to you via the Debt Arrangement Scheme hub (DASH), if you are registered, otherwise by first class post. You have 21 days from the date of posting or electronic transmission to you to respond to the continuing money adviser or the DAS Administrator with your decision. If you do not respond within the 21 days that does not mean that you do not accept the terms of the DPP proposal, you will be considered to have deemed to consent to the DPP. It is therefore important to register your non consent within the 21 day period if you do not agree to the proposal. If a DPP proposal has 100% consent, either deemed or active, then the DAS Administrator will automatically approve it. Where a creditor has not consented or where the DPP is for a single debt and the creditor has not responded within 21 days, the DAS Administrator must approve a DPP proposal that is fair and reasonable. The DAS Administrator will consider all the creditors’ responses, and whether it is appropriate to approve the DPP. Once a DPP is approved you will be notified via a form 2.
If you believe that the debtor has breeched the conditions of the DPP, or any discretionary condition linked to their DPP, then you can apply for the DPP to be revoked. This is done via a form 5 and will come to the DAS Administrator for decision.
You will receive a revocation notice if the debtor, another creditor or a money adviser acting on behalf of the debtor has applied to the DAS Administrator to revoke the DPP and the DAS Administrator proposes to revoke it. You will be given a period of up to 4 weeks to respond to this notice. The DAS Administrator will consider all views and statements prior to determining whether to revoke the DPP.
You will be notified if the DPP is revoked. The DAS Register will be updated with the notice of revocation. At this time you will be able to consider whether further enforcement action to recover debts is appropriate. The terms and conditions under which the debt was originally provided continue to apply and any interest, fees and charges can be applied to the debt.
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