Who can get a trust deed?
The law sets a few conditions for a protected trust deed, but meeting them does not mean a trust deed is right for you. Here is what the rules say and what else an adviser will look at.
To grant a protected trust deed in Scotland, you must have a connection to Scotland in the year before you sign, owe at least £5,000 including interest, not be in an ongoing sequestration, and be unable to repay your debts in full from your payments over the payment period. A trustee also has to agree to act, and your creditors must not block it.
Meeting these conditions does not mean a trust deed is the right choice. It is one of several options, and an adviser needs to look at your whole situation. Free, impartial advice is available from the services in free debt advice in Scotland.
What are the legal conditions?
The conditions are set out in Part 14 of the Bankruptcy (Scotland) Act 2016, as amended in 2024.
| Condition | What it means |
|---|---|
| Connection to Scotland | At some point in the year before you sign, you were habitually resident in Scotland (it was your settled home) or had an established place of business here. |
| Debts of at least £5,000 | Your total debts, including interest, must be at least £5,000 on the date you sign. |
| Not in an ongoing sequestration | You cannot grant one if you have been made bankrupt (sequestrated) and the trustee in that bankruptcy has not yet been discharged. |
| One person per trust deed | Couples cannot share a trust deed. Each partner who wants one needs their own. A limited company cannot grant one. |
| You cannot repay in full | Your total contributions over the payment period must come to less than your debts. If 48 months of payments would clear everything, the deed cannot become protected. |
| Proper steps before signing | You must be given the required information and at least 3 calendar days to consider it. |
| Creditors do not block it | It will not become protected if a majority of your creditors in number, or those owed at least one third of the value, object within 5 weeks. |
The trustee must also be a qualified insolvency practitioner.
Do you need a certain level of income?
There is no minimum payment set in law. Instead, your contribution is worked out using the Common Financial Tool, the method used across Scotland’s statutory debt solutions to decide what you can afford. The trust deed must take the whole of your surplus income: what is left after your allowed essential spending. There is more on this in how your trust deed payment is worked out.
Two points matter here:
- No contribution can be taken from Universal Credit or other social security benefits. Their value still counts when your budget is assessed.
- A trustee has to be willing to act. If there is little or no surplus income and no assets, a trust deed may not be workable, and other options may fit better.
If your debts are no more than £25,000, you have very few assets, and you either receive certain benefits or have no surplus income, an adviser may talk to you about the Minimal Asset Process, a form of bankruptcy with no application fee.
What if you own your home?
Owning a home does not stop you getting a trust deed, but it is one of the biggest things to think about. Your home’s value will be assessed, usually by a surveyor, and any equity (the value left after your mortgage) becomes part of what the trust deed has to deal with.
Your trustee may agree not to sell your home in return for a lump sum, extra monthly payments that can run on after the 48 months, and your co-operation. AiB also says a family member buying your share, or refinancing, may be options. If there is little, no or negative equity, the home can sometimes be left out of the trust deed with your mortgage lender’s agreement.
AiB’s own information document says that if you have a lot of equity in your property, refinancing might work instead of a trust deed.
Can couples and families get a trust deed?
A trust deed is personal to you. Couples cannot grant a joint trust deed, so if you and your partner both have serious debts, each of you would need your own, and each would be assessed separately.
Your household’s circumstances are still taken into account. AiB guidance says the Common Financial Tool looks at full household income and spending, including a partner’s, and then works out your share of the surplus in proportion to your income, so a partner’s higher pay does not inflate your payment unfairly.
Could it affect your job?
Citizens Advice Scotland says a trust deed does not bar you from the jobs and public offices that bankruptcy restricts. But:
- some employers do not allow staff to have a trust deed, most commonly banks and other financial institutions
- your trust deed may restrict you from acting as a company director unless its terms allow it or your trustee agrees
Your trustee must warn you before you sign that a trust deed could damage your employment prospects or business interests. If you are unsure, check your contract or ask your employer’s HR team before you sign.
Not sure whether a trust deed fits your situation? Tell us a little about your situation and a licensed insolvency practitioner firm will call you to go through every option, including ones that are not a trust deed.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected. Free, impartial advice is available from MoneyHelper and other services.
When might a trust deed not suit you?
AiB’s trust deed information document names some situations where other options might be better:
- You could repay your debts in full over a reasonable time. The Debt Arrangement Scheme (DAS) lets you repay through a debt payment programme, with interest, fees and charges frozen and written off when it is completed. A money adviser cannot charge you for setting it up. See trust deed or DAS.
- You have a lot of equity in your property. Refinancing might work.
- You do not think you can keep up payments for 4 years or more. Sequestration, Scotland’s form of bankruptcy, might be a better choice.
A protected trust deed is not possible at all if your debts are under £5,000. It may also not be the right fit if many of your debts are ones that are not written off, such as student loans, court fines or money owed because of fraud.
Weigh up the risks too. A trust deed affects your credit rating for 6 years, puts your name on the public Register of Insolvencies and has fees. Homeowners may need to release equity. If it fails, creditors can pursue you again and the trustee can petition for your sequestration.
If sheriff officers (the officers of the court who enforce debts in Scotland) are already involved, a moratorium on diligence can give you 6 months of breathing space from most enforcement action while you get advice. It does not freeze interest.
Official sources
Common questions
Can I get a trust deed if I live in England?
A trust deed is a Scottish solution. To grant a protected trust deed you must have been habitually resident in Scotland, or had an established place of business here, at some point in the year before you sign. If you live in England or Wales, different options apply there, including IVAs, and a free debt advice service can explain them.
Is there a minimum income for a trust deed?
The law sets no minimum contribution for a trust deed to become protected. Your payment is worked out with the Common Financial Tool from your income and essential spending, and no contribution can be taken from Universal Credit or other benefits. In practice a trustee must be willing to act, so ask an adviser whether a trust deed is workable on your income.
Can I get a trust deed if I have been bankrupt before?
You cannot grant a protected trust deed if your estate has been sequestrated and the trustee in that sequestration has not yet been discharged. Once that trustee has been discharged, this particular rule no longer stops you, but an adviser will look at your full history and every option open to you before anything is decided.
Can a company director get a trust deed?
The legal conditions for a protected trust deed do not mention company directors. However, your trust deed may restrict you from acting as a director unless its terms allow it or your trustee agrees. If being a director matters for your work or income, raise it with the trustee before you sign and get the answer in writing.
Related guides
- Which debts can go into a trust deed? Debts you can include, debts that are not written off, and bills you keep paying.
- How your trust deed payment is worked out The Common Financial Tool, surplus income, benefits and payment reviews explained.
- Trust deed or DAS? The Debt Arrangement Scheme and a protected trust deed compared side by side.
- The Minimal Asset Process (MAP) A no-fee route into bankruptcy for people with low income, few assets and debts up to £25,000.