Scottish Trust Deed

Plain-English guide

Scottish Trust Deed

A protected trust deed is a formal Scottish debt solution. This page explains what it is, how protection works, the risks to understand, and the alternatives to compare before signing.

Last reviewed: 13 June 2026

Scotland only Trust deeds are part of the Scottish debt and insolvency system.
Usually four years Payments commonly run for four years, though terms can vary.
Not risk-free Credit file, assets, home equity, work and future borrowing can be affected.
Compare options DAS, sequestration, informal plans and free money advice should be considered.

Overview

What is a Scottish trust deed?

A trust deed is a legally binding agreement between a person and the people or organisations they owe money to. It is used to repay all or part of qualifying debts over an agreed period. In Scotland, a trust deed can become a protected trust deed if the legal protection process is completed.

When a trust deed is protected, included creditors are normally bound by it. They cannot contact the person directly about included debts, chase payment, add further interest or charges, or take court action for those unpaid debts while the person keeps to the terms.

A protected trust deed is not simply a lower monthly payment plan. It is a formal insolvency process. A trustee, who must be a licensed Insolvency Practitioner, supervises the arrangement, assesses affordable contributions, deals with creditors and considers assets.

Eligibility

When a trust deed might be considered

It may be relevant if

  • You live in Scotland, or had a qualifying Scottish connection in the year before the trust deed is granted.
  • You owe at least £5,000 in total debts.
  • You have enough income to make regular contributions, or assets that may provide a return to creditors.
  • You cannot realistically repay your debts in full within four years.
  • You understand that a trustee may need to look at property, vehicles, savings, windfalls and other assets.

It may not be suitable if

  • Your only income is from benefits and there is no realistic contribution or asset value.
  • You can repay your debts in full within four years through another route.
  • Your debts are mainly excluded debts, such as court fines, child maintenance or some student loans.
  • You are a homeowner and have not had clear advice on equity, secured lending and the risk to your home.
  • Your employment, business, tenancy or professional status could be affected.

Process

How a protected trust deed usually works

  1. 1

    Get debt advice first

    A money adviser should check whether a trust deed is appropriate and whether another Scottish debt solution is better for the circumstances.

  2. 2

    Speak to a licensed Insolvency Practitioner

    Only a licensed Insolvency Practitioner can arrange a trust deed. They act as trustee and must explain consequences and alternatives.

  3. 3

    Work out affordable contributions

    The trustee reviews income, essential spending, debts and assets. Money advisers and trustees use the Common Financial Tool when assessing affordability.

  4. 4

    Creditors are asked to agree

    The proposal is sent to creditors. Creditors usually have five weeks to reply. Enough creditor objections can stop a trust deed becoming protected.

  5. 5

    Protection is approved and registered

    A trust deed is only protected once approved by Accountant in Bankruptcy. A notice is added to the public Register of Insolvencies.

  6. 6

    Payments continue until discharge

    If the terms are kept, discharge usually follows after the agreed period. Most qualifying unpaid debts included in the deed are then written off.

Debts

What debts can be included?

Commonly included unsecured debts

  • Credit cards and store cards
  • Personal loans and payday loans
  • Overdrafts
  • Catalogue debts
  • Council tax arrears
  • Utility arrears
  • Some benefit overpayments or tax debts, depending on the facts

Debts that need separate advice

  • Mortgage and secured loan arrears
  • Rent arrears where the home may be at risk
  • Court fines and penalties
  • Child maintenance
  • Student loans
  • Debts from fraud or some criminal proceedings

Risks

Benefits and drawbacks to weigh carefully

Potential benefits

  • A single affordable contribution is agreed.
  • Included creditors usually stop direct contact once protection is in place.
  • Interest and charges on included debts are normally frozen while terms are kept.
  • Most qualifying unpaid debt included in the trust deed can be written off after discharge.
  • It can be less restrictive than sequestration for some people, depending on circumstances.

Important drawbacks

  • It affects your credit file for six years from the start date.
  • Your details appear on the public Register of Insolvencies.
  • Assets, including property equity, savings, vehicles or windfalls, may need to be dealt with.
  • Missed payments or lack of cooperation can put the arrangement at risk.
  • Some jobs, directorships, licences, tenancies or financial checks may be affected.
  • If a trust deed fails, creditors may be able to take further action and bankruptcy can become a risk.

Assets and costs

Property, vehicles, fees and changes in income

Assets matter because a trust deed transfers rights in assets to the trustee for the benefit of creditors. That does not always mean an asset will be sold, but it does mean the trustee must consider whether value can be realised.

Homeowners should get specific advice before signing. Equity, secured debts, mortgage arrears, remortgage options and whether another person owns part of the property can all change the outcome.

Trustee fees and outlays are normally paid from money gathered into the trust deed rather than as a separate upfront charge, but fees still reduce what is available to creditors. Ask for a clear explanation of fees, what happens if the deed fails, and whether extra income, bonuses, inheritance or other windfalls must be paid in.

Alternatives

Other Scottish debt options to compare

Debt Arrangement Scheme

A statutory Scottish repayment programme that can protect against creditor action while debts are repaid in full over time.

Debt management plan

An informal repayment arrangement. It is more flexible, but creditors do not have to freeze interest or stop action.

Sequestration

The Scottish form of bankruptcy. It can deal with serious debt but has significant restrictions and asset consequences.

Negotiated repayment

Some people can agree token payments, payment holidays, breathing space through a moratorium or direct arrangements with creditors.

FAQ

Common questions about protected trust deeds

Is a trust deed the same as an IVA?

No. A protected trust deed is a Scottish insolvency process. IVAs apply in England, Wales and Northern Ireland. Scotland has its own debt solutions, including protected trust deeds, the Debt Arrangement Scheme and sequestration.

How long does a protected trust deed usually last?

Most protected trust deeds involve contributions for four years. The exact term and treatment of assets depend on the proposal and the person's circumstances.

Can creditors still contact you after protection?

Once a trust deed is protected, included creditors are normally stopped from contacting you directly, chasing payment, adding further interest or taking court action for included debts.

Does a trust deed affect your credit file?

Yes. A protected trust deed is a formal insolvency solution and can affect your credit file for six years from the date it begins.

Can homeowners use a protected trust deed?

Homeowners may be able to use a protected trust deed, but property and equity must be considered carefully. A trustee may need to realise value from assets, depending on the case.

Sources

Reference material used

This page is general information, not regulated debt advice. It is written from official and free debt-advice sources so readers can understand the topic before speaking to an approved money adviser or licensed Insolvency Practitioner.