The equity release mechanism
Similar to English/Welsh IVAs, Scottish Trust Deeds include an equity release requirement in the final year of the deed. You attempt to remortgage your home to release equity into the Trust Deed for creditors.
The amount released is capped at your equity share and cannot make your mortgage unaffordable. Standard tests apply on loan-to-value, affordability and reasonable terms.
If you cannot remortgage
Where remortgage is impossible (bad credit, no lender will offer at those criteria), several fallback options exist. A payment in lieu (a lump sum from family or elsewhere) can settle the equity release. The Trust Deed can be extended by 12 months of contributions instead. In some cases the Trustee accepts a reduced amount based on available options.
Jointly owned property
If your home is jointly owned with a non-Trust-Deed co-owner, only your share of equity is relevant. The co-owner's share is untouched.
The remortgage attempt would need the co-owner's cooperation because the mortgage is against the whole property. This can be a real practical constraint.
Negative equity properties
Homes in negative equity have no equity to release. The equity release requirement essentially does not apply.
The Trustee may still monitor property values through the deed. If equity appears during the deed, the release requirement can be reactivated.