Protected trust deed

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A protected trust deed, overseen by the Accountant in Bankruptcy, is a voluntary but formal arrangement that is used by Scottish residents where a debtor (who can be a natural person or partnership) grants a trust deed in favor of the trustee which transfers their estate to the trustee for the benefit of creditors. Any person wanting to make an application for a protected trust deed must have been a resident of Scotland for at least six months prior to making the application.

This can be a way for people to deal with debt problems by protecting the debtor from the legal enforcement of debts which are included in the trust deed, but only once it has become protected. It will not reverse any action that has been taken prior to the trust deed, such as earning or bank arrestments, although the trustee may negotiate the lifting of any arrestment. Many people who enter trust deeds are able to keep their homes, but where there is equity, that equity will normally have to be realized to swell the estate.^[1] This can be achieved by third-party buyouts or remortgaging, but in extreme cases may be through the sale of the debtor's home.