Protected Trust Deed vs Bankruptcy

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What Is Sequestration?

Sequestration is the Scottish legal term for bankruptcy. It is a formal court process that can be initiated by you (voluntarily) or by a creditor you owe more than £3,000. Once sequestrated, an official body called the Accountant in Bankruptcy (AiB) or a licensed IP takes control of your assets to repay creditors.

Key Differences at a Glance

• Asset control: In sequestration, your assets (including potentially your home) are handed to a Trustee. In a PTD, you typically retain day-to-day control.
• Minimum debt: Sequestration requires £3,000+; a PTD requires £5,000+.
• Duration: Sequestration usually lasts 12 months before discharge; a PTD typically lasts 48 months.
• Income payments: Both can require you to make contributions from income if you can afford to.
• Public perception: Both appear on the Register of Insolvencies, but many people consider a PTD less stigmatising.
• Profession restrictions: Sequestration carries stricter restrictions on holding certain roles (e.g., company director).
• Credit impact: Both affect your credit file for 6 years from the start date.

Which Is Right for You?

A Protected Trust Deed is generally preferred when you have a regular income and want to avoid the more severe restrictions of sequestration. It gives you a structured repayment plan with a clear end date, legal protection from creditors, and the ability to keep your home in most circumstances.

Sequestration may suit you better if your income is too low to sustain even modest monthly payments, or if you have no assets worth protecting and want a faster resolution (typically 12 months vs 48).

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