Protected Trust Deed Scotland: Write Off Debt in 4 Years

A Protected Trust Deed is Scotland’s main debt write-off solution. It freezes interest, stops sheriff officers, and writes off unaffordable debt after 48 monthly payments. It’s governed by Scottish law and overseen by the Accountant in Bankruptcy — completely separate from the English IVA system. Here’s how it works, whether you qualify, and how it compares to your other options.

What Is a Protected Trust Deed?

#

A Protected Trust Deed (PTD) is a voluntary arrangement where you convey your estate to a trustee for the benefit of your creditors. It’s governed by the Bankruptcy (Scotland) Act 2016 and overseen by the Accountant in Bankruptcy (AiB), not the Insolvency Service.

The key word is “Protected”. A simple Trust Deed isn’t binding on dissenting creditors. The goal is to achieve Protected status, which makes the arrangement legally binding on ALL creditors, regardless of their individual consent.

Once your Trust Deed is Protected:

• All enforcement (diligence) stops immediately
• Interest and charges freeze on all included debts
• Creditors cannot contact you for payment
• Sheriff officers cannot take wages or seize assets
• You make fixed monthly payments for 48 months (4 years)
• At the end, all remaining unsecured debt is legally written off

A PTD is NOT the same as an IVA. It’s a different legal instrument under different legislation with a different process and shorter duration. If you live in Scotland, you use a Trust Deed. If you live in England or Wales, you use an IVA.

Do You Qualify for a Protected Trust Deed?

#

To qualify, you need to meet several criteria:

Minimum Debt of £5,000

#

Your total unsecured debts must be at least £5,000. Multiple creditors are typically required, though this can sometimes be satisfied by having two separate accounts with the same lender.

Habitual Scottish Residency

#

You must be habitually resident in Scotland or have had an established place of business in Scotland in the year before applying. This excludes temporary workers or people on holiday.

Apparent Insolvency

#

You must be “apparently insolvent” — unable to pay your debts as they fall due, or your liabilities exceed your assets. This is a legal requirement under Scottish insolvency law.

Earned or Pension Income

#

You cannot qualify on benefits alone. While disability benefits like Personal Independence Payment (PIP) or Disability Living Allowance (DLA) aren’t counted in your contribution calculation, you must have other earned or pension income to qualify for a PTD.

If you’re on benefits only, the Minimal Asset Process (MAP) might be more suitable.

Minimum Monthly Contribution

#

Your contribution must be high enough to cover the trustee’s fees and provide a meaningful return to creditors. This is typically at least £80 per month, though the exact amount depends on your circumstances.

Debts Included in a Protected Trust Deed

#

The following unsecured debts can be included:

• Credit cards and personal loans
• Bank overdrafts
• Store cards and catalogue debts
• Payday loans and high-cost credit
• Utility arrears (gas, electricity, water)
• Council tax arrears
• HMRC debts (income tax, VAT, PAYE)
• Business debts incurred through trading
• Benefit overpayments (unless fraudulent)
• Money owed to family and friends (if documented)

Debts Excluded from a Protected Trust Deed

#

You cannot include:

• Student loans
• Court fines and criminal penalties
• Child support and maintenance payments
• Secured debts (mortgages, secured loans)
• Hire purchase agreements where you don’t own the goods

You must continue paying these debts separately.

How Does a Protected Trust Deed Work? (Step by Step)

#

Step 1 — Assessment and the 2025 Information Package

#

Your trustee assesses your income and expenditure using the Common Financial Statement (CFS) or Standard Financial Statement (SFS). They calculate how much you can afford to pay each month.

Since January 20, 2025, trustees must provide you with a mandatory information package before you can sign. This includes:

• The PTD Information Document (explaining how PTDs work)
• The PTD Information Video (visual guide to the process)
• A Debt Solution Comparison Table (comparing PTD to DAS, MAP, and sequestration)

You’re entitled to a “cooling-off period” — typically three days — to review these materials before making your decision. This is required under Section 167(3) of the Bankruptcy (Scotland) Act 2016.

Step 2 — You Sign the Trust Deed

#

Once you’ve had time to consider the materials, you sign the Trust Deed. Your trustee must then notify ALL known creditors within seven days.

This notification starts the five-week (35-day) objection window.

Step 3 — The 5-Week Creditor Objection Window

#

During this period, creditors can lodge formal objections. For your Trust Deed to achieve Protected status, it must pass two thresholds:

Number threshold: No more than 50% of notified creditors (by number) can object.

Value threshold: Objecting creditors cannot represent more than one-third (33.3%) of the total debt value.

Here’s the crucial difference from English IVAs: tacit consent. In Scotland, any creditor who doesn’t respond within five weeks is deemed to have agreed to the Trust Deed. Silence equals consent.

In England, creditors must actively vote yes for an IVA to be approved. In Scotland, they must actively object for a PTD to fail. This makes PTDs significantly easier to get approved.

Most Trust Deeds achieve Protected status because creditors rarely bother objecting.

Step 4 — Protection Achieved

#

If your Trust Deed passes both thresholds, your trustee applies to the Accountant in Bankruptcy for registration in the Register of Insolvencies (RoI).

From the moment it’s registered, your Trust Deed is “Protected”. This triggers immediate legal consequences:

• All diligence (enforcement) must stop
• Any existing earnings arrestment must cease
• No new enforcement can begin
• Interest and charges freeze on all included debts
• Creditors are legally prohibited from contacting you

Step 5 — 48 Monthly Payments

#

You make fixed monthly payments for four years (48 months). Your trustee distributes these funds to your creditors according to the terms of the Trust Deed.

Annual reviews: Your trustee reviews your circumstances each year. If your income has increased significantly, your contribution may increase. If your income has fallen, your contribution can be reduced.

The acquirenda rule: If you receive any inheritance, windfall, or lump sum during the four years, it must be paid to your trustee. This is a legal requirement under Scottish trust law.

Changes to your circumstances: You must inform your trustee of any significant changes, such as:

• A new job with higher pay
• Redundancy or job loss
• Moving house
• Receiving a bonus or commission

Step 6 — Discharge and Debt Write-Off

#

After your final payment, your trustee issues a Certificate of Discharge (Form 4). This is your proof that:

• All remaining unsecured debts are legally written off
• You’ve completed the Trust Deed successfully
• Creditors can never chase those debts again

You should share this certificate with credit reference agencies (Experian, Equifax, TransUnion) to update your credit file to “Satisfied” or “Settled”.

How Does a PTD Stop Sheriff Officers?

#

If you’re being chased by sheriff officers from firms like Stirling Park, Scott & Co, or Walker Love, a Protected Trust Deed provides immediate legal protection.

Scottish Enforcement (Diligence)

#

In Scotland, debt recovery is called “diligence”. The most common forms are:

Earnings arrestment (wage arrestment): A creditor instructs your employer to deduct money directly from your wages. This continues until the debt is paid or an insolvency solution is put in place.

Bank arrestment: A one-off seizure of funds in your bank account. As of 2025, the Minimum Protected Balance (MPB) is £1,000. If your balance is under £1,000, the arrestment is ineffective.

Attachment: Seizure of goods kept outside your home (vehicles, tools) to be sold at auction.

Once your Trust Deed is Protected, ALL of these must stop. Any existing earnings arrestment must cease immediately, and no new diligence can be initiated for the duration of your arrangement.

The Statutory Moratorium

#

If you’re facing immediate threat from sheriff officers and need time to set up a PTD, you can apply for a Statutory Moratorium through the Accountant in Bankruptcy.

This provides six months of protection during which no diligence can be executed. It gives you breathing space to work with an adviser and set up a formal solution.

What Happens to Your Home?

#

A Trust Deed technically conveys your “whole estate” to the trustee. This includes your home. However, Scottish law provides a mechanism to protect your primary residence.

The Section 10 Dwelling House Exclusion

#

Under Regulation 6 of the Protected Trust Deeds (Scotland) Regulations, your home can be excluded from the estate if:

1. Your mortgage lender agrees not to claim under the Trust Deed for any debt secured by the property
2. A professional valuation is obtained from a chartered surveyor
3. You submit Form 1A before granting the Trust Deed to obtain your lender’s agreement

If these conditions are met, your home is protected from sale. The vast majority of homeowners successfully exclude their property using this mechanism.

If Your Home Is NOT Excluded

#

If you can’t obtain lender agreement or your home isn’t excluded for another reason, the trustee has a duty to realise any significant equity for creditors. This can happen through:

• Equity buyout: A third party (often a family member) pays a lump sum to the trustee
• Remortgage: You remortgage to release equity
• PTD extension: Your Trust Deed is extended beyond 48 months to allow you to pay the equity value over time

Compare this to the 2025 IVA Protocol in England, which automatically protects homes. If you have equity over £10,000, your IVA term extends to 72 months, but there’s no forced sale. In Scotland, the Section 10 mechanism requires explicit lender agreement — a different approach to the same problem.

Your Car and Other Assets

#

Essential household items are excluded from your estate and cannot be sold. This includes furniture, bedding, clothing, and appliances necessary for daily life.

Vehicles: You can usually keep your car if:

• It’s necessary for work or essential travel (getting children to school, medical appointments)
• The value is reasonable (typically under £3,000, though this is at the trustee’s discretion)

If you own a high-value vehicle that’s not essential, you may need to sell it and replace it with a cheaper one.

High-value assets such as second homes, luxury vehicles, or significant investments must be surrendered and sold. The proceeds go to your creditors.

What Does a Protected Trust Deed Cost?

#

There are no upfront fees. The trustee’s remuneration and the Accountant in Bankruptcy’s statutory fees are paid from your monthly contributions.

AiB Statutory Fees (2025)

#

• PTD registration: £40
• Annual supervision: £120
• Audit of trustee accounts: 5% of outlays and remuneration
• Register of Insolvencies notice: £40

Trustee Remuneration

#

Your trustee typically charges 15-20% of the funds distributed to creditors. This is a priority payment — the trustee is paid before creditors receive their share.

What You Pay

#

Your monthly payment stays the same regardless of these fees. They’re built into the structure of the Trust Deed. You just make your single monthly payment, and the trustee handles the rest.

Is Your Debt Prescribed?

#

Before considering a Trust Deed, it’s worth checking whether your debt is already “prescribed” under Scottish law.

The 5-Year Short Negative Prescription

#

Most unsecured debts — credit cards, loans, overdrafts, catalogue debts, and even council tax — are subject to a five-year prescriptive period.

If five years pass with no “relevant claim” (court decree) or “relevant acknowledgment” (payment or written admission), the debt is extinguished. It doesn’t just become unenforceable — it legally ceases to exist.

This is stronger than the English six-year limitation, where debts become statute-barred but technically still exist.

The 2025 Prescription Act Changes

#

The Prescription (Scotland) Act 2018 came into full effect on February 28, 2025. Key changes include:

Knowledge test: The five-year clock only starts when the creditor is aware that a loss occurred, who caused it, and the debtor’s identity.

20-year longstop for court decrees: Court decrees are now subject to a hard 20-year limit that cannot be reset by acknowledgement. This provides finality for old debts.

What This Means for You

#

If your last payment or written acknowledgment was more than five years ago, and there’s no court decree, the debt may already be prescribed. You don’t need a Trust Deed — the debt is gone.

For more information, see our guide on prescription and limitation.

Protected Trust Deed vs IVA — What’s the Difference?

#

Many people confuse PTDs with IVAs. They’re similar in purpose but governed by different laws and have different processes.

Key Takeaways

#

PTDs are shorter: Four years instead of five to six. You’re debt-free faster.

Simpler approval process: Tacit consent means most PTDs are approved. English IVAs require active creditor votes, which can be harder to secure.

Different property rules: Scotland uses the Section 10 exclusion mechanism. England uses automatic protection with term extensions.

If you live in Scotland, you use a Trust Deed. If you live in England or Wales, you use an IVA. They’re not interchangeable.

Other Scottish Debt Solutions

#

A PTD isn’t your only option. Depending on your circumstances, one of these alternatives might be better:

Debt Arrangement Scheme (DAS)

#

DAS allows you to repay your debts in full via a Debt Payment Programme (DPP).

• Repayment: You pay everything back, but with interest frozen
• Duration: Can exceed 10 years depending on affordability
• Assets: Usually not at risk
• Best for: People who can afford full repayment over time but need protection from enforcement and interest

DAS doesn’t write off debt. It just gives you breathing space to pay it back without creditor pressure.

Minimal Asset Process (MAP)

#

MAP is Scotland’s equivalent of the English Debt Relief Order (DRO). It’s a form of bankruptcy for people with low income and few assets.

• Debt range: £1,500 to £25,000
• Assets: Total assets under £2,000 (excluding one vehicle worth under £3,000)
• Fee: £50
• Duration: Debts written off after six months
• Payments: No monthly contributions required
• Best for: Low income, few assets, smaller debts

MAP is faster than a PTD (6 months vs 48 months) but has strict asset and income limits.

Sequestration (Full Bankruptcy)

#

Sequestration is Scottish bankruptcy for debts over £3,000.

• Process: Your estate is transferred to a trustee (often the AiB)
• Payments: Contributions from income typically last 48 months
• Discharge: You’re discharged from bankruptcy after 12 months, but payments continue for 48 months
• Risk: Significant risk to your home and professional status
• Best for: High debt, complex situations, or when a PTD isn’t suitable

Sequestration is a last resort. It has serious consequences for your home, career, and credit rating.

Quick Comparison

#

DAS: Repay everything, but protected from creditors. Good if you can afford full repayment.

MAP: Small debts, fast write-off (6 months), no payments. Good for very low income.

PTD: Larger debts, 4-year write-off, affordable payments. Good for most people with unsecured debt over £5,000.

Sequestration: Last resort for high debt or complex situations. Serious consequences.

How Does a Trust Deed Affect Your Credit?

#

A Protected Trust Deed has a significant impact on your credit file.

Credit File Marker

#

A PTD marker stays on your credit file for six years from the date the Trust Deed was granted. This is the same as an IVA, bankruptcy, or DRO.

During these six years, you’ll struggle to:

• Get mainstream credit
• Obtain a mortgage
• Secure certain jobs (particularly in finance, law, or roles requiring security clearance)

Register of Insolvencies

#

Your PTD is listed on the Register of Insolvencies (RoI) during the 48-month term. This is a public register that anyone can search.

Credit Restrictions During the PTD

#

You cannot obtain credit over £2,000 without your trustee’s permission while your Trust Deed is active. This is a legal requirement.

Most people don’t need to borrow during their PTD, as the monthly payment is set at an affordable level.

After Discharge

#

Once you’ve completed your PTD and received your Certificate of Discharge (Form 4), share it with the credit reference agencies. This updates your file to show the debts are “Satisfied” or “Settled”.

After six years, the PTD marker is removed from your credit file. You can then start rebuilding your credit score from scratch.

If you’re struggling with debt and want to find out what options are available, use our free IVA calculator to see how much you could write off.

Frequently Asked Questions

#

How long does a Protected Trust Deed last?

#

48 months (4 years). This is shorter than an English IVA, which lasts 60-72 months (5-6 years).

Can I keep my house with a Trust Deed?

#

Yes, if you can exclude it using the Section 10 dwelling house exclusion. This requires your mortgage lender to agree not to claim under the Trust Deed. Most homeowners successfully protect their homes this way.

Can I keep my car?

#

Yes, if it’s essential for work or essential travel (school runs, medical appointments) and the value is reasonable (typically under £3,000). High-value luxury vehicles may need to be sold.

What happens if I get an inheritance during my Trust Deed?

#

This is called “acquirenda”. Any inheritance, windfall, or lump sum received during the four years must be paid to your trustee. It’s a legal requirement.

Can I get a Trust Deed if I’m self-employed?

#

Yes, if you meet the eligibility criteria. Your income is calculated using your average monthly earnings after business expenses.

What’s the minimum debt for a Trust Deed?

#

£5,000 of unsecured debt. Below this, you might be eligible for MAP (Minimal Asset Process) instead.

Can I get a Trust Deed on benefits only?

#

No. You must have earned or pension income. Disability benefits (PIP, DLA) don’t count toward your contribution, but you need other income to qualify. If you’re on benefits only, consider MAP instead.

Will a Trust Deed stop wage arrestment?

#

Yes. Once your Trust Deed is Protected, any existing earnings arrestment must cease immediately. Sheriff officers from firms like Stirling Park or Scott & Co cannot continue deducting from your wages.

What happens if my Trust Deed is rejected?

#

If your Trust Deed doesn’t achieve Protected status (because too many creditors objected), you can consider:

• DAS (if you can afford to repay in full over time)
• MAP (if your debts are under £25,000 and you have few assets)
• Sequestration (full bankruptcy)

Your trustee will advise you on the best alternative.

Is a Trust Deed the same as an IVA?

#

No. A Trust Deed is governed by Scottish law (Bankruptcy (Scotland) Act 2016) and overseen by the Accountant in Bankruptcy. An IVA is governed by English law (Insolvency Act 1986) and overseen by the Insolvency Service. They’re different legal instruments with different processes. PTDs are shorter (4 years vs 5-6 years) and have a simpler approval process (tacit consent vs active vote).

What debts can’t go into a Trust Deed?

#

Student loans, court fines, child maintenance, and secured debts (mortgages, secured loans) are excluded. You must continue paying these separately.

How much does a Trust Deed cost?

#

There are no upfront fees. The trustee’s fees (typically 15-20% of collections) and the AiB’s statutory fees (registration £40, annual supervision £120, etc.) are paid from your monthly contributions. Your payment stays the same regardless of fees.

Get Advice on Your Debt Options

#

If you live in Scotland and have at least £5,000 of unsecured debt, a Protected Trust Deed could write off a significant portion in just four years.

If you live in England or Wales, see our IVA guide instead. IVAs and Trust Deeds are governed by different laws and aren’t interchangeable.

Want to check if you qualify? Use our free calculator to see how much debt you could write off. It takes 2 minutes, won’t affect your credit score, and there’s no obligation.

For more general debt advice, visit our debt help page. If you have council tax arrears, these can be included in a Trust Deed.

If you think your debt might already be prescribed (over five years old with no court decree), read our guide on prescription and limitation before committing to a Trust Deed.