Partners, family and joint debts

There is no such thing as a joint trust deed in Scotland. A trust deed covers one person’s debts, so a couple who both need one must each have their own. Your partner does not have to pay towards your trust deed, but anyone who shares a joint debt with you can still be asked to pay all of it. Your partner’s income can also affect how your own monthly payment is worked out.

Can we get a joint trust deed?

No. Guidance from the Accountant in Bankruptcy (AiB), the Scottish Government agency that supervises trust deeds, says a couple cannot grant a joint trust deed. That applies to married couples, civil partners and people in a similar relationship, even if you own things together, such as your home.

If you both have debts you cannot manage:

• you would each need your own trust deed, with its own trustee arrangements, fees and entry on the Register of Insolvencies
• each of you has to meet the conditions on your own, including owing at least £5,000
• Citizens Advice Scotland says it is possible for you both to have a trust deed, but you should both discuss with the trustee whether that would help

This is one place where the Debt Arrangement Scheme (DAS) works differently. A DAS debt payment programme can be joint, as long as you both qualify. See trust deed or DAS? for how the two compare.

What happens to joint debts?

A joint debt is one you took out with someone else, such as a joint loan or an overdrawn joint bank account. Citizens Advice Scotland calls this “joint and several liability”: each of you is responsible for the whole debt, not just half of it.

If you sign a trust deed:

• the joint debt goes into your trust deed as one of your debts
• the other person can be pursued for the whole amount, according to Citizens Advice Scotland
• mygov.scot puts it simply: the other person becomes responsible for making payments towards the debt

So talk to anyone you share debts with before you sign, including an ex-partner. The professional standard for insolvency practitioners handling trust deeds, Statement of Insolvency Practice 3.3, says they should record how a trust deed would affect other people, including joint creditors, anyone who has guaranteed one of your debts, and anyone who co-owns property with you.

If you own your home jointly, mygov.scot says the trustee can only take your share of the equity (the value left after the mortgage is paid off). Read your home and a trust deed for how equity is dealt with.

Does my partner’s income count?

It can. Your monthly contribution is worked out with the Common Financial Tool, the budgeting method used across Scotland’s statutory debt solutions. AiB’s guidance on the tool says it is designed to look at the whole household’s income and spending, including a partner’s, and that advisers and trustees should try to get the full picture.

That does not mean your partner pays your debts. Where the whole household income is known, AiB describes a fair way to work out your share:

1. Work out what share of the household income is yours.
2. Work out how much the household has left after allowed living costs.
3. Apply your share to that surplus.

For example, if you earn £1,200 a month and your partner earns £1,800, your income is 40% of the household total. If the household has £300 a month left after allowed costs, your share of that surplus would be £120. AiB says this approach stops a higher-earning partner pushing up what you are expected to pay.

If your partner does not want to share their details, the adviser or trustee should record why, and work out your budget on your own income, with a reasonable share of household costs. AiB gives the example of assuming you pay half of the housing and energy bills.

If a partner or relative wants to help with your payments, the trustee has to check the amount, usually with written confirmation from them, and tell your creditors. Unless there is a binding agreement, creditors are told the money cannot be relied on. No contribution can come from anyone’s Universal Credit or other social security benefits.

Other adults in your home, such as grown-up children who work, can also be taken into account, for example because they affect your council tax.

You can read more in how your trust deed payment is worked out.

Will my partner or family find out?

A protected trust deed is public. It is recorded on the Register of Insolvencies, which anyone can search for free. The entry shows the name and address of the person who signed the trust deed, the trustee’s details and the key dates. It does not list your partner, but it does show your address. See the Register of Insolvencies for how long entries stay.

What if we separate, or someone in the family dies?

Tell your trustee. mygov.scot lists separating from a partner, divorce and the death of a partner or family member as changes you must report, because they can change your income, your costs and your household.

A few other family matters are worth knowing:

• Child maintenance you pay is an ongoing cost. It cannot be included in a trust deed, and you keep paying it.
• Child maintenance paid to you counts as income a contribution can be taken from, with the child’s costs allowed for in your budget.
• If you die during a trust deed, AiB’s key facts document says the trust deed continues, and your estate pays your debts and the costs of the trust deed before anything goes to your family.

What are the options for couples?

A trust deed is only one option, and it may not be the right one for either of you. An adviser needs to look at both of your situations before anyone can say what might suit you. Alternatives include:

• a joint DAS debt payment programme, where you repay debts in full, with interest, fees and charges frozen
• sequestration (bankruptcy), or the Minimal Asset Process if you have a low income and few assets
• an informal debt management plan, which is not legally binding

You can both get free, impartial advice, together or separately. See free debt advice in Scotland.

Official sources

• AiB Notes for Guidance, protected trust deeds: section 2.1, Who can grant a trust deed
• AiB Notes for Guidance, Common Financial Tool: section 2, Household composition
• Citizens Advice Scotland: Trust deeds in Scotland (joint debts)
• mygov.scot: Debts that can be included in a trust deed
• AiB: Protected trust deed information document (key facts)