The rules on the Protected Trust Deeds (PTDs), 1985 Act, have been subjected to a reformation. This draft for reformation was introduced in July 2004. The main focus is to ensure better administration of these PTDs, certain new rules for the discharge of debtors. This new change will also be instrumental to support the supervisory role of the Accountant in Bankruptcy (AiB) as initiated by the section 23 of the 2007 Act. You will also find new provisions on student loan debts in bankruptcies to Protected Trust Deeds.
A Protected Trust Deed is a great alternative to bankruptcy for the Scottish residents. In fact trust deeds have a historical presence. Sir Walter Scott’s trust deed in 1826 is a remarkable instance. PTDs came in vogue by the 1985 Act. In the 2007 Act, several issues were brought into the limelight such as the grievances of the debtors in Scotland regarding the administration of the arrangements as amended by section 20(1) of the Bankruptcy and Diligence etc. (Scotland) Act 2007 (“the 2007 Act”). There are various routes out of debt-formal and informal. Informal debt solutions are debt consolidation and debt management. However many debtors prefer the formal way. For Scottish people, the most well known procedures are Sequestration and Protected Trust Deeds. Now the 2007 Act, has introduced major changes to reform the entire trust deed procedure.
There are some important regulations that are covered in this Act for debtors. The new rules is that the date from which the trust deed is protected commences is now registered in the Register of Insolvencies. Another regulation puts it that the arrangement must have a statement for all estate belonging to the debtor excluding any assets which would be excluded from vesting in a trustee in a sequestration. The new regulations will ensure that the debtor has full knowledge about the consequences of the trust deeds before it is granted.
The new rules protect the debtors in the sense that the creditors are restricted not to recover debts included in a PTD, whether they accept it or not. There is an interesting new provision for discharge of debtors under PTDs. The current rule does not have any such provision. This new mechanism allows the trustee to discharge a debtor if the trustee is of the opinion that the debtor has fulfilled the obligations. This discharge is recorded in the Register of Insolvencies. The debtor has a right of appeal against a refusal of his or her discharge. The next most important development is student loan debts. Under the provisions, there shall be provisions to discharge from liability to repay student loan on discharge from PTD. These regulations have been prescribed and are yet to come into force. The Scottish Government has termed “PTD” as a “softer bankruptcy” with a number of advantages to the debtors.
An assessment was completed as part of the review process during the second half of 2008 and was added in the review report on the policy objectives of this instrument. A review of this new reformation regarding policy will take place in a full fledged manner in 2009/10.
Trust Deed Example
Example Unsecured Debts
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Your Monthly Repayments Would Be
a Scottish Trust Deed £748
(total contractual repayments)
a Scottish Trust Deed £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
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