How long does a trust deed last?

A protected trust deed usually lasts 48 months (four years) from the date you sign it. The law allows a shorter period only if your payments would clear your debts in full, and a longer one if you miss payments, agree an extension with your trustee, or make extra payments so you can keep your home. It only finishes properly when you are discharged, which is a separate step after the payments end.

A trust deed is one of several ways of dealing with debt in Scotland, and each lasts a different length of time. There is a comparison further down this page, and free, impartial advice is available from the services in free debt advice in Scotland.

How long is a standard trust deed?

Under the Bankruptcy (Scotland) Act 2016, the payment period is 48 months beginning with the date the trust deed is granted, which is the day you sign it. During that time you pay a regular contribution to your trustee, the licensed insolvency practitioner who runs the trust deed and pays your creditors.

The Accountant in Bankruptcy (AiB), the Scottish agency that supervises trust deeds, says in its information document that a protected trust deed usually lasts four years, but can be longer if you have valuable property.

Two points often catch people out.

• The clock starts when you sign, not when the trust deed becomes protected. Protection comes later, after your creditors have had five weeks to object. See how a trust deed becomes protected.
• Your payment can change during the four years. Your contribution is worked out using the Common Financial Tool, the standard method used across Scotland to work out what you can afford, and it is reviewed at least once a year. See how your trust deed payment is worked out.

The trust deed also covers money or property you receive in the four years from the date you sign, such as an inheritance. You must tell your trustee about it, and it may be used to pay your creditors.

Can a trust deed be shorter than four years?

Only in limited cases. The trustee can set a shorter payment period only if, in their opinion, what you pay during that shorter period (from income or otherwise) would pay your debts in full, including interest, as they stood when you signed.

There is a catch built into the law. For a trust deed to be protected, your contributions over the payment period must add up to less than your total debts. AiB’s guidance says that if 48 months of contributions would repay everything, the trust deed cannot become protected. In that situation AiB’s information document points out that other options, such as the Debt Arrangement Scheme (DAS), might be better. See trust deed or DAS.

Early discharge in extenuating circumstances

Since 1 July 2024 the law has allowed a trustee to seek your discharge before the end of the payment period where extenuating circumstances mean you can no longer keep to the trust deed and there is no reasonable prospect of you being able to resume. AiB’s guidance gives a condition or illness as examples, and says a period of unemployment on its own would not normally be enough. Your creditors are asked first, and AiB reviews the proposal if enough of them object. Our guide to getting discharged from a trust deed explains the steps.

What can make a trust deed last longer?

Missed payments

If you do not pay your contributions for a period, the law allows the trustee to set a longer payment period to make up for it. AiB’s information document also warns that if you stop paying without permission, your trustee might take the money directly from your wages. Under the Act, once two payments in a row have been missed, the trustee can require you to instruct your employer to deduct your contribution from your pay and send it to them.

An agreed extension

You and your trustee can agree a longer payment period, for example if your income drops and your payment is reduced for a while. If the trustee decides to lengthen or shorten the payment period, the law says they must tell you without delay. See if your circumstances change.

Your home

If you own your home, the trustee may agree not to sell it in return for a lump sum, extra monthly payments, and your co-operation. The amounts are based on a surveyor’s valuation of your home at the date you signed. Where you also pay a contribution from income, those extra monthly payments run after the 48 months, so the trust deed lasts longer. If you do not keep to the agreement, the trustee can withdraw from it.

Waiting for discharge

Discharge is not automatic. After the last payment, the trustee has to confirm you met your obligations and co-operated, then apply to AiB. Any inhibition on your property (a legal notice that stops you selling or borrowing against it) must also have been recalled or have expired first.

What does the timeline look like?

What happens when the payments end?

If you have kept to the terms and co-operated, the trustee sends AiB an application for your discharge, and you are discharged on the date 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, court fines and debts taken on after you signed.

If the trustee thinks you have not met your obligations, they must ask AiB to agree to refuse your discharge. AiB’s guidance says it would not be appropriate to refuse a discharge because of circumstances beyond your control, such as a change that stopped you paying your contribution. If discharge is refused, the debts are not written off and creditors are free to take recovery action again.

How does that compare with other options?

Length is only one factor. Fees, your home, your job and which debts are written off all matter too, and an adviser needs to look at your full situation before any option is right for you.

Official sources

• Bankruptcy (Scotland) Act 2016, section 168: the payment period
• Bankruptcy (Scotland) Act 2016, section 175: agreements about your home
• Bankruptcy (Scotland) Act 2016, section 184B: early discharge in extenuating circumstances
• AiB Notes for Guidance 9.2: discharge due to extenuating circumstances
• AiB protected trust deed information document