Protected Trust Deed Scotland: Impact on Creditor Enforcement

What a Protected Trust Deed Is

A Protected Trust Deed (PTD) is a voluntary arrangement where a debtor assigns their estate to a Trustee for the benefit of creditors. The day after the trust deed is published in the Register of Insolvencies (maintained by the Accountant in Bankruptcy) begins the five-week objection period. The deed may become protected unless a majority of creditors by number, or at least one third by value, object to the trustee in writing or electronically within that period. Once protected, it binds the creditors covered by it and they can no longer pursue enforcement independently.

For a creditor holding a court decree, this is a significant change in position.

How a PTD Stops Your Enforcement

Once a PTD becomes protected, it binds the creditors covered by it. Active diligence is halted — any earnings arrestment currently running is suspended, and you cannot instruct new enforcement steps like bank arrestments or attachment of goods.

Instead of collecting directly from the debtor, you lodge a formal claim with the appointed Trustee. The Trustee realises the debtor's assets (sells property, collects income contributions), deducts fees, and distributes the proceeds to creditors proportionally. A PTD typically runs for four years, after which the debtor is discharged from the covered debts.

The practical recovery for unsecured creditors in a PTD varies. In many cases it is significantly less than the full decree amount — sometimes 20 to 30 pence per pound, sometimes less.

How It Differs from Other Insolvency Routes

Debt Arrangement Scheme (DAS): A DAS Debt Payment Programme lets the debtor pay their debts in full through managed instalments. Interest and fees are frozen, and enforcement is paused, but creditors eventually receive the full amount. A DAS is better for creditors than a PTD because there is no write-off.

Sequestration (bankruptcy): The debtor's estate vests in a Trustee or the AiB. All enforcement stops. The debtor is discharged after 12 months. Recovery for unsecured creditors is often minimal. The Minimal Asset Process is the simplified version for debtors with total debts under £25,000.

Protected Trust Deed: Falls between DAS and sequestration. The debtor makes contributions for four years and creditors receive a proportion. The remaining debt is written off at discharge.

How to Check if Your Debtor Has Entered Insolvency

Before instructing a Sheriff Officer, search these public registers:

• Register of Insolvencies (ROI) — maintained by the Accountant in Bankruptcy (AiB). Shows whether the debtor is subject to sequestration, a Protected Trust Deed, or a statutory moratorium.
• Debt Arrangement Scheme (DAS) Register — shows whether the debtor has an approved Debt Payment Programme.
• Edinburgh Gazette — it is not the statutory register of PTDs; use the AiB's Register of Insolvencies to check PTD status.
• Companies House — for corporate debtors, shows winding-up orders, administration appointments, and charges.

All of these are publicly accessible online. Running these searches before spending money on officer fees prevents you from instructing enforcement against someone who is already in a protected insolvency process.

What You Can Still Do

While you cannot enforce directly during a PTD, you can:

• Lodge your claim with the Trustee within the statutory deadline to ensure you receive your proportional share of any distribution
• Object to the trust deed being granted protected status (within five weeks of the notice being published) if you believe the debtor has not disclosed assets or the terms are unfair to creditors
• Monitor distributions from the Trustee and query any discrepancies

Acting Before Insolvency

The best protection against losing your decree to insolvency is acting quickly. Once the four-week post-decision wait and the 14-day Charge for Payment window expire, instructing diligence promptly gives you the best chance of recovering funds before the debtor enters any formal insolvency process.

The enforcement guide covers the full timeline from Decision Form to diligence, including the public register searches you should run before committing to officer fees.

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