Not being able to pay off your debt could be really stressful. However, applying for a trust deed is not as difficult as it may seem.

However, often people are unaware of how to apply for trust deeds in Scotland

This guide provides all the necessary information you need about a protected trust deed

What is a protected trust deed Scotland?

Protected trust deeds are legal agreements made between your trustee and your creditors. 

They are authorised and regulated by the financial Accountants in Bankruptcy. Your trustee will evaluate your debt. This includes: credit card, store cards, and even council tax. After evaluation you could be asked to sign a protected trust deed

Moreover, your trustee might ask sheriff officers to confirm if you have any previous criminal records. 

Your trust deed might become protected after your trustees’ approval.

What is the difference between a trust deed and a protected trust deed?

A trust deed can be divided into two categories for residents who live in Scotland: 

  1.  Trust deed
  2. Protected trust deed

A trust deed could be used as an alternative to a bankruptcy. A professional (trustee) will look over your payment term. This will be done for a specified period of time selected through mutual agreement with your creditors. 

In this case, you willingly transfer the rights of your assets to your trustee. As a result, your trustee will look over your debts and pay your creditor for you on a monthly basis. Your creditors can not contact you directly in case of a protected status of a trust deed

If your case is selected for a debt solution after processing, you require a licensed insolvency practitioner to administrate your case.

Whereas, a protected trust deed is looked over by the Accountant in Bankruptcy. A voluntary agreement is signed by the Scottish resident. 

The agreement transfers the rights of a trust deed to the trustee. However, this is usually in favor of the creditors. 

Moreover, you are expected to make reduced payments for over 4 years. After that your unsecured debts are written off. This means your creditor will not be able to threaten you into making any further payments.  

protected trust deed

Is it possible to extend my trust deed?

Normally your trust deed is expected to last for four years in Scotland. However, experts could advise you to enter for a period more than that. 

Your trust deeds could be extended for a number of reasons, such as: 

  • Missed payments
  • You are not able to keep up with monthly payment anymore
  • If you do not declare your extra income
  • If you fail to declare a decrease in your house hold payment
  • In case of a windfall you have not informed your trustee about

How long does it take to set up a trust deed in Scotland?

Your trustee will ask you to provide documentations. The faster you provide your information, the quicker your trustee will set up your trust deed. 

After evaluating your financial situation, your trustee will decide how much monthly payments will be made to your creditor. 

If your advisor acts quickly, the agreements could be completed within a week. 

Do I have to transfer ownership of my assets in a PTD?

Your trustee could ask you to transfer the ownership of your assets for evaluation. 

However, you could be allowed to buy the trustee’s interest for your transferred assets. In this case, hire purchase agreements could be made. You could purchase your transferred assets through a third party’s money.

In case no agreement is made, your trustee can sell your assets to pay off your creditors.

How will I benefit from a protected trust deed?

You could be entitled to a number of benefits through a PTD in Scotland. 

These include: 

  • Your trustee will look over your debt level, which means your creditors can not contact you directly. 
  • Your creditors can not force or harass you into making payments.
  • Creditors can not force you into signing a sequestration.
  • Your interest and charges of debt could be frozen after a protected trust deed is signed.
  • You might not have to sell your house.
  • Debt payments could be made on weekly or monthly payments.
  • After calculating your living cost, your monthly payments are decided. This excludes the amount of your essential living cost.
  • In case of an increase or decrease in your financial circumstances, your debt contributions could be recalculated. You might even get a debt relief.

How do I know if my trust deed is protected?

In case of a trust deed that is protected, your creditors will no longer be able to contact you directly. They can not request or force you to pay more money.

Moreover, they can not add additional fees or penalties towards your debts. 

The creditors cannot take any legal action against you through court.

Since your legal actions are taken by your trustee, your creditor can not force you into a sequestration.

However, your trust deed can only become protected if the third party agrees. A proposal stating how much monthly payment you are able to make will be sent. Your creditors will have 5 weeks to respond if they agree or disagree to the proposal.

What will happen if my trust deed does not become protected?

In case you are unable to get a protected status, you could continue with your existing arrangement. 

Unfortunately, your creditors could take legal action against you if you are unable to pay off your debts on time. You could also be forced into a sequestration.

However, you could get protection from the financial conduct authority.  

Will my protected trust deed affect my employment?

It is highly unlikely that your protected deed will affect your employment. 

However, if you are applying for a job where you are required to handle money, it could be difficult. Other jobs include:

  • Police
  • Fire services 
  • Prison services 

What are the drawbacks of trust deeds that are protected?

I will list down some disadvantages of a PTD for you. 

These include:

  • Your PTD could affect the terms of your employment for specific jobs. 
  • There is a high risk of bankruptcy in case your trust deeds fail. 
  • Your credit rating could be affected for approximately 6 years. This is from the date the arrangements were signed.
  • Insolvency practitioners are responsible for your monthly repayments.
  • Your information is added to a public register: Register of Insolvencies. This could be accessed by anyone.
  • You could be forced into a sequestration if you fail to pay back their money. 
  • You could be forced into selling your property.

When will I get discharged from a protected trust deed?

You will be discharged after you have completed all your trust deed payments. This normally takes 4 years. However, it could stay in your credit file for up to six years. 

Your discharge will become official after it has been recorded on the register of insolvencies. 


However, if you are qualified for a minimal asset process (MAP), you could be discharged after six months. 

What will happen at the end of a protected trust deed?

Your debt problems including outstanding debts will be written off. 

This means you will receive a letter of discharge and your creditors can no longer ask you for money. 

Can a protected trust deed affect my credit rating?

A PTD could affect your credit rating. 

This is mainly because you are breaching original contractual terms. As a result, you might not have an outstanding debit. 

Credit reference agencies will keep a track of your credit score.

Frequently Asked Questions (FAQs) 

How will a Scottish trust deed help?

A Scottish trust deed will help you pay off your unwanted debts.

Moreover, insolvency practitioners will help you repay your creditors within 4 years.


Furthermore, a third party cannot take you to court if you are in a Scottish trust deed. 

How long does it take for my record to be removed from the register of insolvencies? 

It could take approximately one year after your trustee has discharged themselves.

How will a moratorium help?

A moratorium could help you with debt management and decisions. You will be informed about any enforcement action taken. Moreover, interest and charges will be frozen.

Furthermore, it could help even if you enter a debt arrangement scheme later.  

What should I include in debts?

Short term liabilities such as: loan payments, credit cards, and store cards could be included. Moreover, any type of unsecured debt could be included.

Can I get a trust deed more than once?

Yes, you could get a trust deed more than once. However, this could not be easy.
I would suggest you get debt advice to know what is the best option for you.

To Conclude

Read and follow the instructions carefully before making any decisions about your deed arrangements.

It is important to understand that applying for a PTD could be easier if you are categorised as insolvent. However, I would suggest you contact a debt advisor to understand which debt solutions are best for you.

If you feel we have missed out on anything, please feel free to contact us. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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