Effect of protected status
Where a trust deed has protected status, all creditors are bound by the terms of the PTD. Section 172 of the Act covers the general effect of protected status over diligence.
The client cannot make an application for sequestration while the PTD subsists.
During a PTD, a secured creditor cannot:
1s172(3) B(S)A 2016•make a claim under the PTD for any of the debt in respect of which the security is held. This means that the secured creditor, if they have agreed to be excluded from the trust deed, is also bound by the terms of the trust deed; or
•take diligence against the assets conveyed to the trustee under the PTD; or
•petition for the sequestration of the client during the subsistence of the PTD.
On the date of protection, any current earnings arrestment, maintenance arrestment or conjoined arrestment order cease to have effect.
2s173 B(S)A 2016A deduction from earnings order is not ‘competent’ after the date of protection to secure the payment of any amount due by the client under a maintenance calculation in respect of which a claim could be made under the trust deed.
The execution of an earnings arrestment or the making of a conjoined arrestment order is not competent, after the date of protection, to enforce a debt in respect of which the creditor is entitled to make a claim under the trust deed.
Therefore, protection from diligence from creditors is achieved by the trust deed gaining protected status.