What is a trust deed in Scotland?

A trust deed is a formal, legally binding agreement between you and your creditors in Scotland. You make affordable monthly payments (typically for 4 years) and at the end, any remaining unsecured debt is written off. It's the Scottish equivalent of an Individual Voluntary Arrangement (IVA) available in England and Wales. Once a trust deed becomes 'protected', creditors included in it can't take further action against you — they can't chase you for payment, add interest, or pursue court action.

What's the difference between a trust deed and an IVA?

A trust deed is the Scottish version of an IVA — they serve the same purpose but operate under different legislation. Key differences: trust deeds last 4 years (IVAs are typically 5-6 years), trust deeds are governed by Scottish insolvency law (the Bankruptcy (Scotland) Act 2016), and the approval process is different. You apply for a trust deed if you live in Scotland. If you live in England, Wales, or Northern Ireland, you'd apply for an IVA instead.

How much do you pay in a trust deed?

Your monthly payment is based on what you can afford after essential living costs. A licensed insolvency practitioner (trustee) calculates your income and expenditure using the Common Financial Tool (Scotland's standard guidelines). Typical payments range from £100–£500 per month depending on income. You'll usually pay for 48 months. At the end, any remaining qualifying debt is written off. The trustee's fees are taken from your payments — there's no upfront cost to you.

Will a trust deed affect my credit score?

Yes. A trust deed stays on your credit file for 6 years from the date it's registered. During this period, getting credit will be very difficult. It's also recorded on the Register of Insolvencies (Scotland's public insolvency register). After 6 years, it's removed from your credit file and you can start rebuilding your credit. While it's a serious step, it may be better for your credit long-term than years of missed payments and defaults.

Trust Deed Guide Scotland — Protected Trust Deeds Explained | PocketWise

Trust Deed Guide Scotland — Protected Trust Deeds Explained

How trust deeds work in Scotland, eligibility, costs, the difference between a trust deed and an IVA, and what happens to your debts and credit file.

By PocketWise · 25 March 2026 · 4 min read

If you live in Scotland and can’t repay your debts, a trust deed (or protected trust deed) could write off what you can’t afford. Here’s how they work.

Key Facts

Feature	Detail
Available in	Scotland only
Duration	48 months (4 years)
Minimum debt	Typically £5,000+ (no legal minimum, but most trustees require this)
Monthly payments	Based on what you can afford
Outcome	Remaining qualifying debt is written off
Who arranges it	A licensed insolvency practitioner (trustee)
Legislation	Bankruptcy (Scotland) Act 2016
Credit file impact	6 years
Cost to you upfront	£0 — trustee fees come from your payments

How a Trust Deed Works

Step	Detail
1	Contact a free debt adviser or insolvency practitioner
2	They assess your income, expenses, debts, and assets
3	If suitable, they propose a trust deed to your creditors
4	Creditors have 5 weeks to respond
5	If fewer than a third of creditors (by value) object, it becomes a protected trust deed
6	You make monthly payments for 48 months
7	At the end, remaining qualifying debt is written off

Protected vs Unprotected Trust Deed

Feature	Protected trust deed	Unprotected trust deed
Creditors can chase you	No	Yes
Interest and charges frozen	Yes	Not guaranteed
Enforced on all creditors	Yes (even those who didn’t agree)	No
Registered on public register	Yes	Not automatically
Most common type	Yes — almost all trust deeds become protected	Rare

Who Qualifies

Criteria	Requirement
Location	Live in Scotland (or have a connection to Scotland)
Debts	Multiple unsecured debts, typically £5,000+
Income	Regular income to make monthly payments
Disposable income	Enough to make meaningful contributions after essential costs
Not suitable for	Those with no income, very low debts, or those who could manage debts informally

What Debts Are Included

Included	NOT included
Credit cards	Secured debts (mortgage, car finance)
Personal loans	Student loans
Overdrafts	Child maintenance
Catalogue debts	Criminal fines
Council tax arrears	Court fines
Payday loans	Debts arising from fraud
HMRC debts (tax, NI)
Utility arrears
Store cards
Buy now pay later

Payment Calculation

Element	Detail
Tool used	Common Financial Tool (Scotland’s standard budgeting tool)
Income included	Wages, benefits, pension, any other income
Allowances	Housing, food, travel, utilities, council tax, clothing, and other essentials
Result	Your disposable income — this is your monthly trust deed payment

Example

Item	Monthly amount
Take-home pay	£1,800
Less: Rent/mortgage	-£600
Less: Council tax	-£130
Less: Utility bills	-£150
Less: Food	-£300
Less: Transport	-£100
Less: Other essentials	-£200
Disposable income / monthly payment	£320

Over 48 months: £320 × 48 = £15,360 paid toward debts. Any remaining qualifying debt (e.g. if you owed £30,000, the remaining ~£15,000) is written off.

What Happens to Your Home

Situation	What happens
You rent	No impact on your home
You own (with equity)	The trustee may require equity to be released in the final year — often through a remortgage or by extending payments by up to 12 months
You own (negative equity or minimal equity)	Usually no impact
Your partner owns the home	No impact

During the Trust Deed

Rule	Detail
Make all payments on time	Missing payments can lead to the trust deed failing
Tell the trustee if circumstances change	Pay rise, job loss, windfall — they need to know
Cannot take on additional credit over £500 without disclosing	Borrowing restriction
Annual review	Trustee reviews your income/expenses annually — payments may change
Windfalls	Inheritance, lottery wins, PPI refunds — must be declared and may go to creditors

Trust Deed vs Other Scottish Debt Solutions

Feature	Trust deed	MAP (Minimal Asset Process)	Sequestration (bankruptcy)	DAS (Debt Arrangement Scheme)
Duration	4 years	6 months	1–4 years	Until debts repaid in full
Debts written off	Yes	Yes	Yes	No — repay in full
Monthly payments	Your disposable income	None (or very small)	Income payments for up to 4 years	Affordable payments
Assets at risk	Equity may be released	Minimal assets only	Home and assets at risk	Assets protected
Minimum debt	~£5,000 (practical)	£25,000 max	£3,000+	No minimum
Cost	£0 upfront (trustee takes fees from payments)	£90	£150	£0
Credit file	6 years	6 years	6 years	Until debts repaid
Best for	Regular income, significant debts	Very low income, low assets	Substantial debts, complex situations	Want to repay in full but need more time

After the Trust Deed Ends

Event	Detail
Remaining qualifying debt	Written off
Credit file	Trust deed stays for 6 years from start date
Insolvency register	Entry removed 3 months after trust deed ends
Getting credit	Gradually easier, especially after 6-year mark
Employment	No longer restricted on insolvency register

Where to Get Free Advice

Organisation	Contact
StepChange	stepchange.org / 0800 138 1111
Citizens Advice Scotland	cas.org.uk
Money Advice Scotland	moneyadvicescotland.org.uk
Advice Direct Scotland	advicedirect.scot / 0808 164 6000
National Debtline	nationaldebtline.org / 0808 808 4000