Scottish Trust Deed

Scottish Trust Deeds

A protected trust deed is a formal Scottish debt solution. This page explains how it works, who may qualify, what it can cost, and what to compare before signing.

General information only. This site does not provide regulated debt advice, arrange trust deeds, or act as an insolvency practitioner. For personal advice, use MoneyHelper's free debt advice locator or speak to an approved money adviser.

Last reviewed: 24 June 2026

Scotland only Protected trust deeds are part of Scotland's personal insolvency system.
48 months Most protected trust deeds involve contributions for four years.
£5,000 National Debtline states this is the minimum total debt threshold before applying.
16.3p AiB's 2024-25 mean ordinary creditor dividend for concluded protected trust deeds.

Overview

What is a Scottish trust deed?

A trust deed is a voluntary arrangement used in Scotland when someone cannot repay unsecured debts in full. The person transfers rights in their estate to a trustee, who must be a licensed Insolvency Practitioner, for the benefit of creditors.

A trust deed becomes a protected trust deed only when the statutory process has been completed and Accountant in Bankruptcy records it in the Register of Insolvencies. Protection matters because included creditors are then normally bound by the arrangement, even if they did not actively agree to it.

This is not the same as an informal repayment plan. It is a formal insolvency process. It can reduce direct creditor pressure and lead to discharge from qualifying included debts, but it can also affect assets, credit records, public records, employment checks and future borrowing.

Protection

How a trust deed becomes protected

Ordinary trust deed

  • A trust deed can be signed before it is protected.
  • At that stage, it does not bind every creditor automatically.
  • The trustee must notify creditors and follow the statutory protection process.
  • If protection is not achieved, creditors who have not agreed may still pursue the debt.

Protected trust deed

  • Creditors usually have a five-week objection period.
  • Protection can be blocked if a majority in number object, or if creditors holding at least one-third in debt value object.
  • Creditors who do not reply are not counted as objecting.
  • Once protected, included creditors are normally prevented from taking further recovery action while the terms are kept.

Accountant in Bankruptcy

AiB supervises personal insolvency in Scotland and maintains the Register of Insolvencies. A protected trust deed is a public insolvency record.

July 2024 changes

Regulations from 1 July 2024 tightened Scottish connection requirements and added processes around removal of protected status where material errors or irregularities arise.

January 2025 document

For trust deeds granted after 20 January 2025, the Insolvency Practitioner must provide the trust deed information document and allow adequate time to consider it.

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 disposable income for 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 assets, windfalls and changes in circumstances must be discussed with the trustee.

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 through the Debt Arrangement Scheme or another route.
  • Your debts are mainly excluded debts, such as court fines, maintenance or student loans.
  • You are a homeowner and have not had clear advice on equity, secured lending and the risk to your home.
  • Your job, business, professional registration, tenancy or directorship could be affected.

Process

How the process usually works

  1. 1

    Get free debt advice

    A money adviser should review income, assets, debts, arrears, household position and alternatives before any formal insolvency option is chosen.

  2. 2

    Speak to a licensed Insolvency Practitioner

    Only a licensed Insolvency Practitioner can act as trustee. They must explain the consequences, fees, assets and responsibilities.

  3. 3

    Assess affordability

    Income and essential spending are reviewed. The Common Financial Tool is used in Scottish statutory debt solutions to assess affordable contributions.

  4. 4

    Review the required information

    For deeds granted after 20 January 2025, the trust deed information document must be provided before signing, with adequate time to consider it.

  5. 5

    Creditors are notified

    The trustee sends the proposal to creditors. The trust deed becomes protected only if the legal conditions are met and objection thresholds are not reached.

  6. 6

    Contributions and reviews continue

    Most arrangements run for 48 months. Contributions can change if income or circumstances change, and the trustee must deal with assets and creditor distributions.

Debts

What can and cannot be included

Commonly included 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 needing separate advice

  • Mortgage, secured loan and hire purchase debts
  • Rent arrears where the home may be at risk
  • Court fines, penalties and compensation orders
  • Maintenance owed to a spouse, civil partner or children
  • Student loans
  • Debts from fraud or some criminal proceedings

Costs

Fees, assets and creditor returns

Trustee fees are paid from money gathered into the trust deed, such as monthly contributions or asset realisations. That means the person may not pay a separate upfront bill, but fees still reduce the money available to creditors.

National Debtline says trustee fees are usually about £4,000 or more and cannot be charged before a trust deed is set up. Citizens Advice Scotland explains that fees are not charged hourly: they are normally a fixed fee plus a percentage of assets gathered in.

AiB statistics show why fee transparency matters. In 2024-25, 4,920 protected trust deeds were registered. For protected trust deeds concluded in 2024-25, the mean dividend paid to ordinary creditors, including zero-dividend cases, was 16.3p in the pound, and the average administration cost for a case concluded with a dividend payable was £5,300.

4,920 Protected trust deeds registered in Scotland in 2024-25.
£18,300 Median debt level for protected trust deeds in 2024-25.
£150 Median monthly contribution for protected trust deeds in 2024-25.

Assets

Home, car, income changes and windfalls

A trust deed can involve transferring assets to the trustee. This does not always mean an asset will be sold, but it does mean the trustee must consider whether value can be realised for creditors.

Homeowners need specific advice before signing. Equity, mortgage arrears, secured loans, joint ownership, a family member's interest and whether the property can be excluded can all change the outcome. In some cases, a sale can be avoided through another arrangement; in other cases, the home may be at risk.

A car may be treated differently depending on value, need and finance. During the trust deed, income changes, bonuses, inheritance, compensation and other new money can also matter. The safe assumption is that the trustee must be told about material changes.

Risks

Benefits and drawbacks to weigh carefully

Potential benefits

  • A single affordable contribution is agreed.
  • Included creditors normally stop direct contact once protection is in place.
  • Interest and charges on included debts are normally frozen while the terms are kept.
  • Earnings arrestments for included debts may stop after protection.
  • Most qualifying unpaid included debt can be written off after discharge.

Important drawbacks

  • It affects your credit file for six years from the start date.
  • Your details appear on the public Register of Insolvencies.
  • Assets, savings, home equity, vehicles and windfalls may need to be dealt with.
  • Some jobs, directorships, public offices, licences, tenancies or financial checks may be affected.
  • If it fails, debts may not be written off and bankruptcy can become a risk.

Alternatives

Other Scottish debt options to compare

Debt options in Scotland at a glance
Option What it does Debt written off? Key caution
Protected trust deed Formal insolvency agreement administered by a licensed Insolvency Practitioner. Usually, after discharge for qualifying included debts. Credit file, public register, assets, home equity and job checks can be affected.
Debt Arrangement Scheme Statutory repayment programme that protects against creditor action while debts are repaid. No. Debts are repaid in full, although interest and charges can be frozen and waived on completion. Can last longer than a trust deed, but it is not insolvency.
Sequestration Scottish bankruptcy, used where debts cannot be managed through repayment or another solution. Usually, for qualifying debts after discharge. More serious restrictions and asset consequences may apply.
Minimal Asset Process A form of bankruptcy for people with low income, few assets and debts within the MAP limits. Usually, for qualifying debts after discharge. Strict eligibility criteria apply.
Informal repayment plan Negotiated payments to creditors, sometimes through a debt management plan. No automatic write-off. Creditors do not have to freeze interest or stop action unless they agree.

IVAs and Debt Relief Orders are not Scottish debt solutions. Scottish residents normally need advice on Scottish options such as protected trust deeds, the Debt Arrangement Scheme, sequestration, MAP or informal repayment.

FAQ

Common questions about protected trust deeds

Is a protected trust deed the same as an IVA?

No. A protected trust deed is a Scottish insolvency process. IVAs are used in England, Wales and Northern Ireland. Scotland has separate debt solutions, including protected trust deeds, DAS and sequestration.

How long does a protected trust deed usually last?

Most protected trust deeds involve contributions for 48 months. They can last longer if the proposal says so, if payments are missed, or if assets such as home equity need extra time.

How much debt do you need?

National Debtline states that you need to owe at least £5,000 to all creditors before you are allowed to apply. Suitability also depends on income, assets and the type of debts owed.

Can creditors object?

Yes. Creditors have an objection period. Protection can be blocked if enough creditors object by number or by debt value. Creditors who do not reply are not counted as objecting.

Will it 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. It is also recorded in the public Register of Insolvencies.

Can you keep your home or car?

It depends on value, need, finance, equity and the terms proposed. Homeowners and vehicle owners should get individual advice before signing because assets can change the outcome.

What happens if income changes?

Tell the trustee. Contributions can be reviewed if income rises or falls, and the trustee may need to consider new money, bonuses, inheritance or other windfalls during the trust deed.

What happens if it fails?

If you miss payments or do not cooperate, the trustee may refuse discharge. The included debts may not be written off, interest and charges may be added back, and bankruptcy can become a risk.

Sources

Reference material used

This page is general information, not debt advice. It uses official Scottish Government, AiB, legislation and free debt-advice sources. Personal debt decisions should be checked with an approved money adviser or licensed Insolvency Practitioner.