A Protected Trust Deed is a formal insolvency solution for people in Scotland who cannot repay their debts but want to avoid the more drastic consequences of sequestration. It allows you to make affordable monthly payments over 4 years and write off the remaining debt at the end.
For an overview of all Scottish debt solutions, see the Scottish Debt Solutions Guide.
Who Qualifies for a Protected Trust Deed?
To enter a Protected Trust Deed you must:
- Be resident in Scotland (or have had your main interests in Scotland for the last 6 months)
- Be unable to pay your debts as they fall due (insolvent)
- Have total qualifying debt of at least £5,000
- Have sufficient monthly income to make contributions after essential expenses
There is no maximum debt level. Unlike the Debt Arrangement Scheme (DAS), a Trust Deed does write off remaining debt — making it suitable for people whose debt level means full repayment is not realistic.
The Trust Deed Process — Step by Step
| Step | What happens | Timeline |
|---|---|---|
| 1. Instruction | You instruct a licensed Insolvency Practitioner | Day 1 |
| 2. Financial assessment | IP assesses income, assets, debts, and monthly surplus | Week 1–2 |
| 3. Trust Deed prepared | IP drafts the terms of the deed | Week 2–3 |
| 4. Edinburgh Gazette advertisement | Deed advertised publicly | From execution date |
| 5. Protection period | Creditors have 5 weeks to object | Weeks 4–9 |
| 6. Protected status | If no majority objection — deed becomes protected | Week 9 |
| 7. Monthly contributions | You pay agreed amount to Trustee for typically 4 years | Months 1–48 |
| 8. Discharge | Remaining debt written off after completion | Month 48+ |
What a Trust Deed Covers
A Protected Trust Deed typically covers:
- Credit cards and store cards
- Personal loans and overdrafts
- Catalogue debts
- HMRC debts (with HMRC agreement)
- Payday loans
It does not cover:
- Student loans (repaid via PAYE separately)
- Child maintenance arrears
- Court fines
- Debts incurred fraudulently
- Secured debts (mortgage, secured loans — these continue separately)
How Monthly Payments Are Calculated
The Trustee calculates your ‘contribution’ based on your disposable income — income minus reasonable living expenses. This typically follows the Common Financial Statement (CFS) or Determination of Debtor’s Contribution (DODC) guidelines.
Example:
- Net monthly income: £2,100
- Reasonable expenses (housing, food, utilities, transport): £1,750
- Monthly surplus / contribution: £350/month × 48 months = £16,800 total paid in
If your circumstances change (redundancy, illness, new dependent), you can apply to vary the contribution.
Equity in Property
If you own a home with equity, the Trustee will assess it typically at year 3 of the Trust Deed:
| Equity position | Typical outcome |
|---|---|
| No significant equity | Property interest usually excluded |
| Equity present but low | May be excluded if remortgaging is not feasible |
| Significant equity | Remortgage to release equity, or 12-month extension to Trust Deed |
| Very high equity | Trustee may seek sale in extreme cases |
Protected Trust Deed vs Other Scottish Solutions
| Protected Trust Deed | DAS | Sequestration (MAP) | |
|---|---|---|---|
| Debt written off? | Yes — remaining at end | No — repaid in full | Yes |
| Creditors must agree? | Majority by value must not object | Yes (via AiB) | No |
| Interest frozen? | Yes from execution | Yes from approval | Yes |
| Duration | Typically 4 years | Flexible — until debts repaid | 12 months |
| Assets at risk? | Home equity assessed | No | Yes |
| Cost | IP fees from contributions | Money Adviser fees (often free) | £50–£200 |
Finding a Trustee / Insolvency Practitioner
Insolvency Practitioners who administer Trust Deeds in Scotland must be licensed by a recognised professional body (ICAS, ICAEW, or AiB direct licensing). You can find licensed IPs via the AiB register.
Before instructing an IP:
- Get free advice first from Citizens Advice Scotland, StepChange, or National Debtline
- Ask for a full breakdown of fee structure before agreeing
- Compare DAS as an alternative if you could repay all debts over time (DAS has lower fees)