Protected Trust Deed

The Protected Trust Deed (PTD) is a formal arrangement that is used in Scotland where a consumer debtor grants a ‘deed’ in favour of the trustee which transfers their assets to the trustee for the benefit of creditors. It can be an extremely valuable way for people to effectively deal with debt problems. It will normally stop legal action and protect you and your home.

Information and downloads can be obtained fron aib.gov.uk, however for answers to specific problems, www.trust-deed.co.uk can normally provide quick effective and most of all Free advice. The site has contributions from several practitioners. WARNING - People with debt problems can and should contact a licenced Insolvency Practitioner direct. Unfortunately there are a number of debt firms who will charge you for preparing basic information and then passing you to an Insolvency Practitioner.

Provided certain conditions are met, the Trust Deed may be registered as “protected”, thereby preventing creditors from petitioning for the debtor’s sequestration. The main advantage of entering into a trust deed are that it takes the pressure off as all correspondence and the Trustee will handle all of the communications from a persons creditors, there is NO court involvement and it does not appear in the local paper.

The main disadvantage of a Trust deed is that existing arrestments and other diligence may continue to be effective, home owners would require to deal with equity in their home, but this can normally be dealt with without selling. This can be dealt with by remortgaging, or extra monthly payments. The Trust Deed does not stop you being self employed, there is no credit restriction unlike sequestration

Granting a Trust Deed, by which a person voluntarily transfers some or all of his or her assets to a trustee to administer on behalf of the creditors, is both less formal than the main alternative of sequestration and may also avoid some of the legal disabilities which follow from being made legally bankrupt.

Provided it meets certain conditions, a trust deed may be recorded in the Registrar of Insolvencies as a ‘protected trust deed’. This prevents a creditor from petitioning for the debtor’s sequestration (Bankruptcy) so long as the person granting the trust deed abides by its terms.

Creditors have 5 weeks to object to a trust deed becoming protected. As long as fewer than the majority of creditors in number or creditors representing not more than a third of the value of all the debts do not object, the trust deed becomes protected.

Upon completion of the 36 month period and assuming all aspects of dealing with the debtor’s assets are complete, the Trustee appointed will adjudicate on creditor claims and then proportionally distribute the remainder of the ingathered funds to the creditors. The debtor will then receive a letter of discharge.

The advantages are that the debt is frozen on the date the Trust Deed is signed and the balance of debts are legally written off once the Trust Deed is brought to and end.

Whilst signing a Trust Deed is less formal than sequestration, it is nevertheless a serious step to take.

Granting a Trust Deed is a voluntary act but once a person has signed a Trust Deed he and the trustee are legally bound by it.

In England, Northern Ireland and Wales there is a similar alternative to bankruptcy called an Individual Voluntary Arrangement (IVA).

External links

* [http://www.trust-deed.co.uk - Surviving debt in Scotland] - Provides information and forum for those in debt in Scotland
* [http://www.philipgill.com] - Licenced Practitioners of Trust Deeds for those in debt in Scotland
* [http://www.aib.gov.uk Accountant in Bankruptcy] - Official website of the Accountant in Bankruptcy an Executive Agency of the Scottish Government.