If your circumstances change

If your circumstances change during a trust deed, tell your trustee straight away. Your contribution is reviewed at least once a year anyway, and it can go up or down, or the length of the trust deed can change, to reflect what you can afford. Keeping your trustee informed is part of co-operating with them, which is a condition of being discharged at the end.

What counts as a change of circumstances?

Your trustee is the licensed insolvency practitioner who runs your trust deed. mygov.scot lists the kinds of change you must tell them about. They include:

• your income or benefits going up or down
• your essential costs going up or down
• an emergency expense, such as a car or home repair
• pregnancy, or starting to care for a child
• losing your job, being at risk of losing it, or being off sick
• separating from or divorcing a partner
• the death of a partner or another family member
• a change in your physical or mental health
• a windfall, such as an inheritance or a lottery win

If you are not sure whether something counts, ask. It is always better to tell your trustee about something that turns out not to matter than to leave out something that does. For money that comes to you, see windfalls and inheritance in a trust deed.

How often is my payment reviewed?

The Accountant in Bankruptcy (AiB), the Scottish Government agency that supervises trust deeds, says your trustee should review your income and spending regularly, and at least once a year. The law also requires your trustee to send you, your creditors and AiB an account of the trust deed and a report at least every 12 months.

When something changes, mygov.scot says your trustee will ask you to fill in a new income and expenditure form and show evidence, such as payslips or benefit award letters. Your budget is then worked out again with the Common Financial Tool, the method used across Scotland’s statutory debt solutions to set what someone can afford. See how your trust deed payment is worked out.

What if my income goes down?

Contact your trustee straight away, before you miss a payment if you can. AiB’s guidance says trustees should explain to you that:

• contributions can be varied up and down if your circumstances change
• the payment period can be extended or shortened if your circumstances change or you miss payments
• if you cannot pay a contribution, you must contact your trustee without delay

mygov.scot says that if your income goes down, your trustee may agree to reduce your payment or give you a payment break. A change like this is often called a variation: the trustee agrees to change how much you pay, or for how long.

AiB’s guidance also says it would not be appropriate to refuse your discharge because of circumstances beyond your control, such as a change that stops you paying your contribution. That protection depends on you telling your trustee and co-operating with them.

Redundancy

If you are made redundant, AiB’s guidance says:

• pay in lieu of notice is treated as income over the period it covers
• statutory redundancy pay is looked at in the period you receive it
• the trustee checks whether any part of a severance payment goes to the trust deed

Tell your trustee before you spend any of it. Your contribution is then reassessed on your new income, whether that is a new job, benefits, or nothing for a while.

Illness and early discharge

If a serious illness or another situation outside your control means you cannot carry on, there is now a legal route to end the trust deed early. Since 1 July 2024, a trustee can seek your early discharge for extenuating circumstances. AiB’s guidance says the trustee must be satisfied that:

1. the change is outside your control
2. it stops you meeting your obligations under the trust deed
3. there is no reasonable prospect of you being able to resume before the end of the 48 months

The trustee then writes to your creditors. If a majority in number, or at least one third in value, object within 21 days, the trustee must ask AiB to review it. AiB says extenuating circumstances are not limited to health, but a period of unemployment on its own would not normally be enough.

If you do not want personal or medical details shared with your creditors, you can say so. AiB’s guidance says the trustee must still give creditors enough information to explain the circumstances. You can also find support on our page if you are struggling.

What if my income goes up?

Tell your trustee about a new job, a pay rise, more hours or a partner moving in. AiB’s guidance says that if your income goes up, or your spending goes down, your contribution should normally go up in proportion. AiB’s key facts document puts it simply: your payments can go up or down based on what you can afford.

If your contributions rise enough that you could pay your debts in full, the trustee can set a shorter payment period, but only where the money coming in would clear your debts in full, including interest.

What if I move home?

Tell your trustee your new address, and what your new rent or housing costs will be, because this changes your budget.

If you own your home, there are extra points:

• If your home was left out of the trust deed and you sell it, mygov.scot says any money left after the costs of the sale must be passed to your trustee.
• If you agreed a way of dealing with your equity (the value in your home after the mortgage), AiB’s guidance says that agreement stops applying if the property is sold, and the trust deed is entitled to the full equity from a sale.

So speak to your trustee before you put a property on the market. See your home and a trust deed for how equity works.

What if a trust deed no longer fits my life?

Sometimes a change means a trust deed is no longer workable. Talk to your trustee first, and get free, impartial advice if you want a second view. See free debt advice in Scotland. Depending on what has changed, options might include early discharge, or a different solution such as sequestration, the Minimal Asset Process or the Debt Arrangement Scheme. An adviser needs to look at your situation before anyone can say what might suit you.

Official sources

• mygov.scot: If your circumstances change during the trust deed
• AiB Notes for Guidance, protected trust deeds (sections 2.13, 2.14, 6.1, 6.2, 9.1 and 9.2)
• Bankruptcy (Scotland) Act 2016, section 184B (early discharge in extenuating circumstances)
• Bankruptcy (Scotland) Act 2016, section 168 (payment period)
• AiB: Protected trust deed information document (key facts)