How a trust deed works
From the first conversation to discharge, a trust deed follows set legal steps. This guide walks through each one and roughly when it happens.
A trust deed works in a set order laid down by the Bankruptcy (Scotland) Act 2016. You get advice and information, wait at least 3 days, sign, and your creditors are given 5 weeks to object. If the deed becomes protected, you usually pay a monthly amount for 48 months, and at the end the trustee can apply for your discharge.
Each step has rules that protect you as well as your creditors. Knowing them helps you spot if something is being rushed. Free, impartial advice is available at any stage from the services in free debt advice in Scotland.
What are the steps in a trust deed?
- Advice about all your options. An insolvency practitioner must explain every debt option to you, not just a trust deed. The rules they follow (Statement of Insolvency Practice 3.3) say so.
- Your finances are assessed. The insolvency practitioner looks at your income, essential spending, debts and assets. Your payment is worked out using the Common Financial Tool, the set method used across Scotland. See how your trust deed payment is worked out.
- Warnings and documents. Before you sign, you must be told the possible consequences and given two documents: the Debt Advice and Information Package and a trust deed information document.
- Time to think. You must be given adequate time to consider everything. AiB guidance says this is at least 3 calendar days.
- You sign the trust deed. You and the trustee also sign a statement confirming the warnings and documents were given. The 48-month payment period runs from the date you sign.
- The notice is registered. The trustee must, without delay, send a notice to the Accountant in Bankruptcy (AiB), Scotland’s insolvency service, for registration on the public Register of Insolvencies.
- Your creditors are told. Within 7 days of registration, the trustee sends each creditor a copy of the deed, a claim form and a statement of your affairs.
- The objection period. Creditors have 5 weeks from registration of the notice to object in writing.
- Protection. If not enough creditors object, the trustee sends the papers to AiB within 4 weeks after the objection period ends. AiB registers the deed as protected if it is satisfied the conditions are met.
- Payments and reviews. You make your payments, usually for 48 months. Your contribution is reviewed at least once a year.
- Discharge. If you have kept to the terms and co-operated, the trustee applies to AiB for your discharge. It takes effect when AiB registers it.
What does the timeline look like?
| Stage | When | What happens |
|---|---|---|
| Before signing | At least 3 calendar days after you receive the last of the information | You get the Debt Advice and Information Package and the trust deed information document, and time to consider them |
| Signing | The date of grant | You sign the trust deed. The 48-month payment period starts |
| Registration notice | Without delay after you sign and deliver the deed | The trustee sends a notice to AiB for the Register of Insolvencies |
| Creditors notified | Within 7 days of registration | The trustee sends creditors the deed, a claim form and your statement of affairs |
| Objection period | 5 weeks from registration of the notice | Creditors can object in writing |
| Protection | Papers sent to AiB within 4 weeks after the objection period | AiB registers the deed as protected. Protection runs from that date |
| Payments | Usually 48 months from signing | Contributions are reviewed at least yearly. The period can be longer if payments are missed |
| Discharge | At the end, if you have complied | The trustee applies to AiB. Discharge takes effect when AiB registers it |
What happens before you sign?
The law sets out safeguards that must happen before you sign, and they were strengthened on 20 January 2025.
Your trustee must warn you that a trust deed may lead to your sequestration (Scotland’s form of bankruptcy), cause problems getting credit, mean you have to leave your home or give up other property, require you to pay contributions, harm your job or business prospects, and become public.
For trust deeds signed from that date, you must also be given:
- the Debt Advice and Information Package, an AiB booklet explaining how creditors can take action and where to get free money advice
- the trust deed information document, a short AiB summary of how a protected trust deed works, its costs and its risks
You must then have adequate time to think. AiB guidance says this means at least 3 calendar days, not counting the day you receive the last of the material or the day you sign. So if you receive everything on a Monday, the earliest you should sign is the Friday. AiB warns that signing too early means the trust deed will not meet the conditions for protection.
Use this time to read everything, ask questions and, if you want to, speak to a free adviser. Our guide to what to check before you sign a trust deed has a list of questions.
What happens during the objection period?
Once the notice is registered, your trust deed appears on the Register of Insolvencies, which anyone can search for free. Your creditors then have 5 weeks to decide.
The trust deed is treated as accepted unless the trustee receives written objections from a majority in number of your creditors, or creditors owed at least one third of the value of your debts. Creditors who say nothing are treated as agreeing.
If enough creditors object, the trust deed does not become protected. Creditors can then still take action to recover what you owe and ask the court to make you bankrupt. A trust deed that fails to become protected is also one of the routes into sequestration if you decide to apply yourself.
Want to talk through what happens next? 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.
What happens once the trust deed is protected?
Protection starts on the date AiB registers the deed. From then:
- creditors who objected or were not told have no better right to recover their debt than those who agreed
- an earnings arrestment (a type of diligence, the legal steps a creditor can take to recover a debt, where money is taken straight from your wages) stops having effect
- AiB says creditors cannot collect debts from you, though they can still send you important documents such as annual statements
Until protection, you do not have these benefits, so enforcement by sheriff officers (the court officers who carry out diligence in Scotland) may continue in the meantime.
During the trust deed you make your payments, tell your trustee about any change in your income or spending, and tell them about any money or property you receive in the first 4 years, such as an inheritance. For trust deeds granted on or after 1 July 2024, creditors receive their first share of the money (a dividend) after 12 months, then every 3 months.
If you own your home, the trustee may agree not to sell it in return for a lump sum, extra monthly payments that can run on after the 48 months, and your co-operation. This can make a trust deed last longer. See how long a trust deed lasts.
How does a trust deed end?
Discharge is not automatic. When the payment period ends, the trustee confirms whether you met your obligations and co-operated. If you did, the trustee applies to AiB, and your discharge takes effect when AiB registers it. The debts included in the trust deed that are left are then written off, apart from debts the law says cannot be discharged, such as student loans and court fines.
Your details are removed from the Register of Insolvencies 12 months after the trust deed ends. Your credit rating is affected for 6 years from the date the trust deed began.
If a trust deed fails. If you stop paying without agreement or do not co-operate, the trust deed can fail. Creditors can then start asking for payment again and may add fees, you will not get back what you have paid, and the trustee can petition for your sequestration.
A trust deed is one of several options. The Debt Arrangement Scheme, sequestration and the Minimal Asset Process each work differently, and an adviser can compare them with your full situation in mind.
Official sources
Common questions
How long does it take for a trust deed to become protected?
Your creditors have 5 weeks to object, counted from when the trust deed notice is registered on the Register of Insolvencies. After that period ends, the trustee has up to 4 weeks to send the papers to the Accountant in Bankruptcy, which then decides whether to register the deed as protected. Protection starts from the date of that registration.
Does a trust deed stop a wage arrestment straight away?
No. An earnings arrestment stops having effect once the trust deed is protected, not on the day you sign, so deductions from your pay may carry on for some weeks. If you are facing enforcement now, ask an adviser whether a moratorium on diligence, which gives 6 months of breathing space from creditors' enforcement action, could help while you decide.
Do I have to go to court to get a trust deed?
Setting up a trust deed is not a court process. You sign the deed with your trustee, the trustee registers a notice with the Accountant in Bankruptcy and writes to your creditors, and the Accountant in Bankruptcy registers the deed as protected if the conditions are met. Courts can become involved later, for example if a sequestration petition is made.
Who tells my creditors about my trust deed?
Your trustee does. Within 7 days of the notice being registered, the trustee must send each creditor a copy of the trust deed, a claim form, the notice and a statement of your financial affairs. If creditors still write to you after that, keep the letters and pass them to your trustee so they can deal with them.
Related guides
- Before you sign a trust deed The information and time you must be given, questions to ask, and how to check an insolvency practitioner.
- How a trust deed becomes protected The register notice, the five-week objection period, and what happens if protection is refused.
- Getting discharged from a trust deed How debtor and trustee discharge work, what is written off, refusals and early discharge.
- Trust deed or DAS? The Debt Arrangement Scheme and a protected trust deed compared side by side.