Trust Deeds
If an individual is suffering from an inability to pay their debts and there is no reasonable prospect of clearing the debts then they may wish to appoint a trustee. This is a form of sequestration where the individual agrees with a trustee to hand over all of their assets to the trustee. The trustee then usually submits an application to the court to have the individual sequestrated. This is recorded on the DAS register and the register of insolvencies. Creditors can no longer pursue the debtor for monies owed and the sequestration proceeds as any other (see sequestration). This is a convenient way to stop creditors from pursuing for debts, however it comes with the consequences of being declared bankrupt.
When under the control of the trustee the debtor must comply with the trustee’s instructions. The trustee will prescribe a weekly budget that you must strictly adhere to. If the debtor fails to comply with the terms of the trust deed then the trustee may seek a bankruptcy restriction order.