Trust Deed Scotland: Protected Trust Deed Guide 2026

A Scottish trust deed is a formal debt solution for people who live in Scotland. It is an agreement between you and your creditors to pay what you can afford, usually over 4 years. If the trust deed becomes protected and you complete the agreed terms, qualifying unpaid debts included in it may be written off.

Trust deeds are often described as the Scottish alternative to an IVA, but they are not the same product. IVAs apply in England, Wales and Northern Ireland. Scotland has different debt solutions, including protected trust deeds, the Debt Arrangement Scheme and bankruptcy, known in Scotland as sequestration.

What is a Protected Trust Deed?

According to mygov.scot, a trust deed is a legally binding agreement to pay all or some of the money you owe. A trust deed becomes protected when the required creditor process is met and it is approved by Accountant in Bankruptcy.

When a trust deed is protected, included creditors normally cannot:

• contact you directly for payment
• chase you for included debts
• add further interest or charges
• take court action for unpaid included debts

The word “protected” matters. If the trust deed is not protected, creditors may still be able to take action and can ask the court to make you bankrupt.

Who Can Use a Trust Deed?

A trust deed may be considered if:

• you live in Scotland
• you cannot keep up with unsecured debt repayments
• you have regular income or another realistic way to fund payments
• you owe money to more than one creditor
• you can make an affordable contribution after essential living costs
• a trustee believes the proposal is fair and realistic

Suitability depends on your full circumstances. A trust deed is not suitable simply because you want debts written off. You need advice on your income, assets, car, home, job, family budget and alternatives before signing.

Trust Deed vs IVA

If you live in Scotland, do not apply for an IVA. Compare Scottish routes instead, especially a Debt Arrangement Scheme if you can repay debts in full with time.

Debts Included in a Trust Deed

Trust deeds are mainly used for unsecured debts. Debts often considered include:

• credit cards and store cards
• personal loans
• overdrafts
• catalogue debts
• payday loans
• council tax arrears
• utility arrears
• benefit overpayments
• HMRC debts, depending on the case

You must disclose all debts. Leaving creditors out can create problems and may affect whether the arrangement is fair.

Debts That May Not Be Covered

Some debts need separate advice because they may not be written off or may need to be paid outside the trust deed. These can include:

• current rent or mortgage payments
• secured loans if you keep the secured asset
• car finance or hire purchase if you keep the vehicle
• student loans
• court fines
• child maintenance
• debts created by fraud

Priority bills still matter. A trust deed is not a reason to stop paying rent, mortgage, council tax for the current year, utilities or other essential commitments.

Home, Car and Assets

Your trustee will review assets before recommending a trust deed. Homeowners need advice on equity because your share of property value can affect the proposal. Renters should check tenancy terms and keep rent payments up to date.

Cars are assessed case by case. If a vehicle is essential for work, caring responsibilities or mobility, it may be possible to keep it, but high-value vehicles or unaffordable finance can create problems.

Costs and Payments

Trustee fees are normally paid from the money you contribute into the trust deed rather than as a separate upfront fee. You should still ask:

• what fees will be taken
• how much creditors are expected to receive
• what happens if your income changes
• what happens if the trust deed fails
• whether any alternative would cost less or protect you better

Do not sign if fees, risks and alternatives have not been explained clearly.

Risks and Disadvantages

A protected trust deed can give legal protection, but it also has serious drawbacks:

• your credit file is affected for 6 years
• your details appear on public insolvency registers
• you must follow a strict budget
• windfalls, inheritance or extra income may need to be paid in
• missed payments can put the trust deed at risk
• some jobs, professional roles or tenancy checks may be affected
• excluded debts still need to be handled

If you cannot keep to the terms, the trust deed can fail and creditors may resume action.

Alternatives in Scotland

Compare these before committing:

For England, Wales and Northern Ireland, compare an IVA, Debt Management Plan or Debt Relief Order instead.

How to Get Help

Before signing a trust deed:

1. List every debt, income source, essential bill and asset.
2. Check whether the adviser is authorised and whether a licensed trustee is involved.
3. Ask for the trust deed, DAS, DMP, sequestration and informal options in writing.
4. Take free debt advice if you are unsure.
5. Do not stop priority payments unless a qualified adviser tells you to.

Frequently Asked Questions

Is a trust deed the same as an IVA?

No. A trust deed is a Scottish debt solution. IVAs apply in England, Wales and Northern Ireland, while Scotland has separate solutions including protected trust deeds and the Debt Arrangement Scheme.

How long does a protected trust deed last?

A protected trust deed often lasts around 4 years, but the exact term depends on the proposal and your circumstances.

Can creditors still chase me in a protected trust deed?

Once a trust deed is protected, included creditors are normally stopped from chasing you directly for included debts.

Sources checked

• mygov.scot: what is a trust deed for protected trust deed basics.
• mygov.scot: how to get a trust deed for the approval route and Accountant in Bankruptcy role.
• mygov.scot: Debt Arrangement Scheme for Scottish alternatives.
• GOV.UK debt options for UK debt solution context.