Scottish Trust Deeds: How They Work, Costs and Risks

A trust deed can offer a route out of unmanageable debt, but signing one is a serious commitment. This guide explains eligibility, protection, payments, property and alternatives so you know what to ask before deciding.

IVA Online provides general information, not regulated debt advice. The sources linked below were checked on 6 September 2026; an adviser needs to assess your full circumstances before recommending a solution.

Who can qualify for a Scottish trust deed?

You need at least £5,000 in total debts. You cannot grant a trust deed if you are or have been bankrupt and your bankruptcy trustee has not been discharged. A couple cannot enter a joint trust deed: each person’s position must be assessed separately. These rules are set out in AiB’s eligibility guidance.

Other important considerations are:

• A Scottish connection. For protection, you must have lived in Scotland or had an established place of business there at some point in the preceding year. If you have recently moved, ask an adviser to check your circumstances.
• Your ability to repay. If you can repay your debts in full within four years or less, a protected trust deed is not available.
• Income. Benefits-only income is not suitable for a contribution-based trust deed. Your trustee must check what income can legally fund payments.
• Affordability and assets. The proposal must work after essential living costs and explain how any assets will be dealt with.

National Debtline explains the Scottish connection and repayment conditions. Do not treat a provider’s advertised monthly payment as a universal qualifying amount.

How does a trust deed become protected?

An ordinary trust deed does not bind every creditor. Protected status extends the arrangement’s protection to creditors bound by it, including those who did not agree. Without protection, creditors may still pursue payment or petition for bankruptcy. Scottish Government guide

1. Get advice and a full budget assessment

The insolvency practitioner reviews debts, income, essential spending and assets. Ask them to compare Scottish alternatives, including the Debt Arrangement Scheme (DAS) and sequestration. Disclose every creditor and all property, savings and finance agreements.

2. Read the documents and take time to decide

You should receive the Trust Deed Information Document and Debt Advice and Information Package, with an explanation of the proposal. AiB’s guidance requires at least three calendar days to consider the advice and materials, excluding the day the final material is provided and the day you sign. More time may be appropriate. AiB guidance on time to consider

Use that time to ask about your home, fees and alternatives. Do not assume signing leaves you free to cancel later.

3. Creditors receive notice and have five weeks to respond

After signing, your trustee arranges the notice in the Register of Insolvencies and sends the required information to creditors. The response period is five weeks from publication of the notice. AiB notice guidance

Protection can be blocked if objections come from:

• a majority of creditors by number; or
• creditors representing one-third or more of the debt value.

A creditor who does not respond in time is treated as agreeing. For example, an objection from a creditor owed £10,000 of a £30,000 total reaches the one-third threshold, even if several other creditors agree. This is an illustration of the rule, not a prediction of acceptance. AiB objection rules

4. The trustee applies for registration

Insufficient objections do not remove the other legal requirements. The trustee submits the documents to Accountant in Bankruptcy for registration. Ask for confirmation that protection has been granted; signing alone does not establish protected status. AiB registration guidance

5. Make payments, report changes and complete the terms

Most arrangements funded from income involve at least 48 months of contributions. Keep in contact with your trustee throughout. Discharge is a separate step after your obligations have been assessed, rather than an automatic result of reaching the final scheduled payment.

Benefits and disadvantages

A protected trust deed is a form of insolvency. Consider the effects on your home, credit and work alongside the possible debt relief. Read AiB’s key facts before committing.

Which debts are included or excluded?

Common unsecured debts include credit cards, personal loans, overdrafts, catalogues, council tax arrears and utility arrears. Your trustee must identify how each debt will be treated.

Student loans, criminal fines and debts arising from fraud are examples of debts that cannot be included. Mortgages and other secured borrowing need separate consideration because a lender’s rights over its security are not simply removed by a trust deed. Keep paying ongoing housing and essential household commitments. StepChange’s guide to included debts

Ask for specific advice on maintenance obligations, benefit overpayments, tax liabilities and rent arrears. The type of liability matters: an overdue balance and a new bill are not interchangeable.

Joint debts need particular care. Your trust deed does not give another borrower their own discharge. Ask what the creditor can still recover from a partner or guarantor before either of you signs. National Debtline trust deed guidance

Monthly payments and trustee fees

Your payment is based on an assessment of income and reasonable spending. Include food, utilities, transport, childcare, disability-related costs and other necessary expenses; a budget that overlooks these is not a useful starting point.

There is no single monthly price for a Scottish trust deed. Contributions normally run for at least 48 months unless an alternative arrangement is agreed, such as one based on assets. Benefits cannot themselves be taken as contributions, although the trustee considers the household’s finances when assessing other available income. AiB contribution rules

Trustee remuneration includes a fixed fee and an additional fee calculated as a percentage of funds realised. Ask for the fixed amount, percentage, other costs and estimated creditor return in writing. AiB trustee fee guidance

Illustration, not a quote: £180 a month for 48 months totals £8,640. That is the amount paid into the arrangement, not necessarily the amount creditors receive. Fees, asset contributions, changes in income and the agreed terms all affect the outcome. This calculation does not establish eligibility or a write-off percentage.

Free initial advice does not mean the trust deed itself has no fees. StepChange explains how trustee fees come from payments.

Will I lose my home or car?

Homeowners and joint ownership

A trust deed can put your home at risk. Your trustee assesses its value, secured borrowing and your share of the equity. Equity is broadly the value remaining after secured debts are deducted; obtain a proper valuation and written explanation of the calculation.

If you own jointly, it is your share of the equity that matters to the trustee. It may be possible to agree a trust deed that excludes your home, but this must be settled before signing. Do not assume that keeping up mortgage payments alone protects the property. Scottish Government asset guidance

Ask which outcome is proposed: sale, funds from a third party, extra contributions or a permitted exclusion. Get the amount, deadline and consequences of being unable to raise funds in writing.

Cars, finance and essential belongings

The outcome depends on ownership, value, need and any finance agreement. Explain why you need the vehicle and whether another practical transport option exists. A car needed for work or disability may be treated differently from a valuable non-essential asset; do not rely on a blanket promise that you can keep it.

Basic household necessities are generally protected, but valuable assets may need to be realised. AiB’s explanation of assets

Renting

Keep rent payments up to date and ask about tenancy terms. Including old rent arrears does not necessarily prevent eviction action, so discuss housing risks before signing. National Debtline on rent arrears

Credit records, employment and everyday life

A trust deed affects your credit record for six years and is recorded publicly. It can make borrowing harder or more expensive; finishing payments does not immediately restore your previous credit position. StepChange on credit records

Check employment contracts, professional rules and any directorship restrictions before signing. Ask your bank about the account you will use, particularly if you owe it money. Your adviser should explain how you will receive wages, pay bills and manage without further borrowing. National Debtline’s practical guidance

Creditors may still send statutory documents such as annual statements. Receiving one does not by itself mean protection has failed. Refer demands for payment of included debts to your trustee. AiB guidance on creditor contact

What if my circumstances change?

Tell your trustee promptly about a pay rise, job loss, illness, higher essential costs or an inheritance. Payments are reviewed at least annually, and a change in income may mean they go up or down. Ask how bonuses, overtime and newly acquired assets are treated in your agreement. AiB guidance on financial changes

If a payment becomes unaffordable, contact the trustee before stopping it. A revised payment, break or extension may be considered. Failure to pay or cooperate can lead to termination and a possible bankruptcy petition. StepChange on payment problems

A change outside your control is different from refusing to cooperate. AiB guidance says it would not be appropriate to refuse discharge merely because circumstances beyond your control prevent contributions. In some cases, an early discharge process may be available. Ask your trustee about the applicable route and evidence needed. AiB discharge guidance

Trust deed vs DAS vs sequestration

The right comparison for a Scottish resident usually includes these options:

DAS requires an approved money adviser. It freezes interest and charges under its rules and protects against creditor recovery action. An informal Debt Management Plan does not give the same statutory protection.

For bankruptcy and MAP, use the Scottish Government bankruptcy guide. Compare the effect on assets, total payments and restrictions, not just the advertised length of each solution.

Two situations to discuss with an adviser

A renter who can repay in full with more time: ask whether a DAS programme provides a workable budget and protection. A trust deed should not be assumed suitable simply because existing repayments are high.

A homeowner with a low monthly surplus: ask how equity affects each option. A low proposed payment does not describe the full cost if assets must also contribute.

These are hypothetical discussion prompts, not customer stories or recommendations for a particular solution.

What happens at the end?

Your trustee checks whether you have met your obligations and cooperated before applying for your discharge. Qualifying included debts are then released through that process. Ask for written confirmation and keep it with your records. AiB explains why discharge is conditional

Your discharge and the trustee finishing the administration are not always simultaneous, particularly where assets remain to be dealt with. Confirm what is still outstanding rather than assuming the final payment closes everything. National Debtline on completion and assets

Questions to ask before signing

Take this checklist to your appointment:

1. Why does a trust deed suit my circumstances compared with DAS, sequestration or MAP?
2. Which debts will be included, and which obligations must I keep paying separately?
3. What is the monthly payment, and which essential expenses have been allowed?
4. What fees and other costs will be deducted, and what might creditors receive?
5. Exactly what happens to my home, car, savings and jointly owned assets?
6. What happens if creditors object or protected status is not granted?
7. How will illness, job loss, extra income or inheritance affect the agreement?
8. Could my work, tenancy or bank account be affected?
9. What must happen before I am discharged, and what could continue afterwards?
10. Have I received the required information and enough time to consider it?

Is a trust deed the same as an IVA?

No. Individual Voluntary Arrangements apply in England, Wales and Northern Ireland. Scotland has its own insolvency system. A trust deed is sometimes described as the Scottish alternative to an IVA, but its legal process and conditions differ. A Scottish resident should compare Scottish solutions with an adviser.

Find free debt advice in Scotland

Use the Scottish Government’s free debt advice directory to find a service. It lists charities and other advice routes, including local help. Prepare a list of creditors, balances, income, essential spending and assets so the adviser can assess the whole situation.

Sources and how this guide was checked

The linked sources were checked on 6 September 2026. We use Accountant in Bankruptcy (AiB) for detailed Scottish procedural rules, mygov.scot for public guidance, and established debt charities for practical explanations. Where simplified summaries differ, the detailed AiB guidance informs the procedural wording here.

• AiB: protected trust deed key facts.
• AiB: guidance for trustees, updated 8 July 2026.
• mygov.scot: trust deeds, DAS and bankruptcy.
• National Debtline: trust deeds in Scotland.
• StepChange: getting a trust deed.

Read our editorial policy for our sourcing approach and the limits of this information.