A Protected Trust Deed (PTD) is a voluntary Scottish insolvency process. The debtor grants a deed transferring their estate, subject to statutory exclusions and the deed terms, to a licensed insolvency practitioner as trustee for creditors.
Signing a trust deed and obtaining protected status are separate stages. Do not stop dealing with a court or diligence deadline merely because a proposal is being prepared.
Who can grant a trust deed? #
The current Accountant in Bankruptcy guidance must be applied to residence, legal status and the debtor’s estate. A person already bankrupt cannot simply choose a trust deed instead. Granting the trust deed itself has consequences under the apparent-insolvency rules; the page should not be reduced to a balance-sheet test.
For the deed to become protected, total debts must be at least £5,000. That is a statutory protection threshold, not a recommendation. Income, assets, home equity, debt types, creditor return, fees and alternatives determine suitability.
There is no categorical requirement for wages. Specified benefit income cannot be taken as an ordinary contribution in the same way, but a permitted asset-only, third-party-funded or other arrangement may sometimes be possible. A Scottish adviser must compare MAP, Full Administration bankruptcy and DAS as well.
Information before signing #
For deeds granted under the current rules, the insolvency practitioner must provide the official Protected Trust Deed information document and the Debt Advice and Information Package before signing. Official AiB resources also include a video and debt-solution comparison material.
The debtor must receive adequate time to consider the information: AiB specifies at least three calendar days, excluding the day it is provided. Use that time to check:
- total contributions and duration;
- every asset transferred or excluded;
- home and vehicle treatment;
- trustee fees and estimated creditor return;
- debts that may not be discharged;
- the result if creditors block protection; and
- the consequences of missed contributions or failed cooperation.
The five-week creditor test #
After publication on the Register of Insolvencies, creditors have five weeks to object. The deed may become protected only if objecting creditors:
- are not a majority in number; and
- represent less than one third in value.
Exactly one third in value is enough to prevent protection. Creditors who do not respond are deemed to accede when the statutory conditions are met. Protection is not guaranteed just because the trustee expects it.
Contributions and duration #
The Common Financial Tool is used to assess sustainable income contributions. Where contributions from income are payable, they normally continue for at least 48 months.
That is not a universal fixed four-year end date. Asset-only or another permitted arrangement can differ; missed payments, a variation, extension, realised assets or statutory early-discharge provisions can change the timeline. Ask the trustee to show the precise contribution clause and review rules.
Home, car and other assets #
Assets conveyed by the deed can be realised for creditors. Home equity needs specialist advice, including any proposed agreement to exclude a dwelling house and the secured creditor’s position.
There is no general PTD rule that every car up to £3,000 is protected. That number relates to the separate Minimal Asset Process rules. For a PTD, ownership, finance, value, reasonable need, replacement cost, realisable value and the deed terms all matter.
Savings, investments, inheritances, claims, business assets and other property must be disclosed. Do not transfer or hide assets before advice.
Fees and creditor return #
Trustee remuneration and outlays are paid from the trust estate under statutory and creditor-oversight rules. The proposal and Form 3 material should show anticipated realisations, fees and the amount expected for creditors.
There is no safe universal fee figure. Ask what is fixed, time-costed or conditional; what can be increased; who approves an increase; and how fees change the creditor return.
Effect on creditors and diligence #
Once protected, the deed restricts creditors bound by it from diligence for covered debts and binds non-acceding creditors under the statutory rules. It does not mean every creditor, secured right, excluded debt or communication disappears.
Existing earnings or bank arrestment, attachment, inhibition and unnotified creditors can require specific action. Ask the trustee to confirm in writing which creditor is bound, what notice has been sent and whether an existing step stops, continues or needs a court application.
Discharge and debt release #
Finishing the expected contribution period does not itself print a discharge certificate. When satisfied that obligations and cooperation requirements are met, the trustee applies to Accountant in Bankruptcy using Form 5. If approved, the discharge date is recorded on the Register of Insolvencies.
Discharge releases only debts covered by the statutory effect. Fines, certain student liabilities, fraud-related debts, secured rights and other exclusions can remain. Keep the registered discharge evidence and final account.
Credit, work and public record #
The trust deed and protected status appear on the public Register of Insolvencies. Credit-reference reporting normally has a six-year impact from the start. Some jobs, licences, contracts or professional rules can require disclosure.
A debtor obtaining credit over £2,000 must disclose the protected trust deed to the lender. This is a disclosure duty, not a universal rule that trustee permission alone guarantees borrowing.
Compare the Scottish alternatives #
- DAS: an approved debt payment programme aims to repay included debt and protects against creditor recovery while it remains in force.
- MAP bankruptcy: a route for people meeting the current debt, income and asset rules; it has no application fee and a debt ceiling below £25,000.
- Full Administration bankruptcy: a debtor application generally requires at least £3,000 of debt and one of the statutory routes to eligibility. Debtor applications go to AiB; creditor or trustee petitions follow the court route.
- Informal arrangement: flexible, but does not create statutory protection or require creditors to freeze interest.
Use a Scottish money adviser to compare total payments, assets, fees, protection and failure consequences. An IVA is generally an England, Wales and Northern Ireland solution, not the Scottish substitute for a PTD.
Use the debt-options calculator only as an initial educational comparison. It cannot determine Scottish eligibility, creditor objections, asset treatment or discharge. SourcesSources checked for this guide