Scottish Trust Deed

What a Scottish Trust Deed is

A Scottish Trust Deed is a formal, legally binding arrangement between someone in Scotland with problem debt and their creditors. It's broadly the Scottish equivalent of an Individual Voluntary Arrangement (IVA) in England and Wales, but it operates under different legislation — the Bankruptcy (Scotland) Act 2016 — and has its own specific rules.

Trust Deeds are administered by a qualified Insolvency Practitioner, known in Scotland as the "Trustee." Once the arrangement is in place, you pay an affordable monthly amount to the Trustee for a fixed period (typically 4 years), and at the end any remaining unsecured debt covered by the deed is written off. To be effective, most Trust Deeds are Protected Trust Deeds (PTDs) — the protected status legally binds all creditors, preventing them from taking separate action.

How a Protected Trust Deed works in practice

The process moves through clear stages, all overseen by a Scottish Insolvency Practitioner:

1. Initial assessment. The Insolvency Practitioner reviews your full financial position — income, essential outgoings, debts, assets — to work out what (if anything) you can afford to pay each month.
2. Drafting the Trust Deed. If a Trust Deed is suitable, the IP drafts the document setting out your monthly contribution, the term, and how creditors will be repaid.
3. Signing. You sign the Trust Deed, formally transferring (or "conveying") your estate — your assets — to the Trustee for the benefit of creditors.
4. Notice to creditors. The Trustee notifies all creditors and publishes a notice in the Edinburgh Gazette inviting objections. Creditors have 5 weeks to object.
5. Protected status. If creditors representing less than one-third of your total debts (by value) and less than half by number object, the Trust Deed becomes "Protected" — legally binding all creditors.
6. Registration. The Protected Trust Deed is registered with the Accountant in Bankruptcy (AiB) and listed on the public Register of Insolvencies.
7. Making payments. You pay your agreed monthly contribution to the Trustee, who distributes it between creditors.
8. Discharge. At the end of the term (typically 48 months), the Trustee issues a discharge and any remaining covered debt is written off.

Who a Trust Deed tends to suit

Trust Deeds are aimed at people in a specific situation in Scotland:

• You live in Scotland (Trust Deeds are exclusively a Scottish solution)
• You have at least £5,000 of qualifying unsecured debts
• The debts couldn't be cleared in a reasonable timeframe at contractual repayment rates
• You have a steady income that leaves room for an affordable monthly payment
• You want a formal binding arrangement, not informal self-help
• You don't qualify for the Minimal Asset Process (MAP) and want to avoid full sequestration

What a Trust Deed costs

Trust Deeds aren't free, but the fees come out of your monthly contribution — you don't pay extra. Fees are paid to the Trustee for the work of administering the Trust Deed. They have two components:

• Initial fee. Covers setting up the Trust Deed, drafting the document, and obtaining protected status.
• Ongoing fee. Covers running the arrangement, dealing with creditors, and ultimately issuing the discharge.

All fees must be disclosed clearly in advance and approved by creditors as part of the protected status process. Since 2018, Scottish Trust Deed fees have been subject to additional regulation by the Accountant in Bankruptcy to prevent excessive charges.

How long a Trust Deed lasts

Standard Trust Deeds run for 48 months (4 years). This is one of the main differences from an English IVA, which is typically 60 months. The 4-year term applies regardless of whether you're a homeowner or have property equity — Scotland handles property differently from England.

What happens to your home in a Trust Deed

The treatment of your home in a Scottish Trust Deed differs significantly from an English IVA:

• Any equity in your home over £5,000 (the "minimum value of property" threshold under Scottish insolvency law) typically forms part of the assets transferred to the Trustee.
• You may need to release equity at some point during the Trust Deed — typically through remortgaging or extending the term — to realise the equity for creditors.
• If equity can't be released, you may be able to extend the Trust Deed or pay an equivalent lump sum from another source.
• Your home is unlikely to be sold if you keep up mortgage payments and the Trust Deed is otherwise being honoured — but it's a possibility in extreme cases.

This is one of the most important issues a Scottish Insolvency Practitioner will assess before recommending a Trust Deed for a homeowner.

Which debts a Trust Deed can cover

Most unsecured debts can be included in a Trust Deed:

• Credit cards and store cards
• Personal loans, payday loans and overdrafts
• Catalogue debts
• Council tax arrears
• Certain HMRC debts
• Outstanding utility bills

Some debts can't be included — secured debts (mortgages, car finance), court fines, child maintenance arrears, student loans and TV licence debt all sit outside the Trust Deed. Your Trustee will confirm exactly which debts qualify in your case.

How a Trust Deed affects your credit, home and work

A Trust Deed leaves a footprint on your credit file. It's recorded on the public Register of Insolvencies and shows on your credit report for 6 years from the date of the deed. For that period, getting credit will be harder and more expensive.

Certain Scottish professions have specific restrictions — particularly financial services and parts of the legal profession. If you work in one of these areas, check your employment contract before proceeding.

If a Trust Deed doesn't work out

If your circumstances change — lost income, illness, a major unexpected expense — contact your Trustee immediately. Options include a payment break, a variation to the Trust Deed terms, extension of the term, or in some cases conversion to sequestration. If a Trust Deed fails completely, you'll be liable for the original debts again and may face sequestration anyway.

How UK Debt Team can help

We're an introducer, not a debt advice service. Deciding which Scottish debt solution is right — Trust Deed, DAS, sequestration, MAP, or self-help — is the role of a regulated Scottish debt adviser or Insolvency Practitioner, not us.

What we do is connect people seeking help with regulated solution providers who can carry out that assessment. There's no cost or obligation to use the “Speak to a Trust Deed specialist” button below. If you'd rather go straight to free regulated debt advice, the organisations listed below are an excellent place to start.