Trust Deed Eligibility in Scotland: Who Can Qualify?

Starting point

The headline rules do not amount to automatic qualification

Section 164 of the Bankruptcy (Scotland) Act 2016 sets a minimum of not less than £5,000 of total debt for protected status. Current AiB trustee guidance uses the same threshold. “At least £5,000” is therefore more accurate than saying the person must owe “over £5,000.” (Bankruptcy (Scotland) Act 2016, section 164)

That figure is only a legal starting point. The Insolvency Practitioner still needs to decide whether the proposal is workable, whether income or assets can provide a return, which debts can be included and whether a different route would better fit the debtor's circumstances. Creditors can also object to protection after the proposal is signed.

£5,000Minimum total debt for a deed to gain protected status.
One yearPeriod used for the current Scottish residence or business connection test.
IndividualA couple cannot combine two estates into one joint trust deed.

Jurisdiction

The Scottish-connection test looks back over the previous year

For a living debtor, the current condition is that the person was habitually resident in Scotland, or had an established place of business in Scotland, at some point during the year before the trust deed was granted. The rule was added by the Protected Trust Deeds (Miscellaneous Amendment) (Scotland) Regulations 2024. (2024 amendment regulations)

This is more precise than a checklist saying only “you must live in Scotland now.” Someone who has recently moved needs the dates and facts checked. A place of business also has a legal meaning; simply having a Scottish creditor or bank account should not be presented as enough.

Do not use location as a sales shortcut

Cross-border debts, a recent move, property outside Scotland or work in more than one jurisdiction can make the analysis more complex. A money adviser or Insolvency Practitioner should confirm the applicable procedure before any deed is prepared.

Affordability

Contributions must be sustainable and cannot come from protected benefits

Most income-based proposals involve contributions for at least 48 months. The amount is assessed from income and reasonable expenditure using the Common Financial Tool. The exercise should allow for essential household needs rather than starting from a target payment and forcing the budget to fit it.

AiB guidance states that no contribution can be derived from Universal Credit, tax credits or social security benefits. It also recognises trust deeds funded only by asset realisations. That distinction matters: “benefits-only income always makes any trust deed legally impossible” is too broad, but a proposal cannot use protected benefit income as its contribution. (AiB guidance on contributions)

If 48 months of the assessed income contribution would equal or exceed the debts existing when the deed is granted, it cannot gain protected status. A Debt Payment Programme under DAS may be more suitable where full repayment is realistic over a reasonable period.

The wider assessment

Assets and debt types can change suitability

A homeowner, vehicle owner, saver or self-employed person is not automatically disqualified. However, the trustee must understand what is owned, what it is worth, whether anyone else has an interest and what value could be made available for creditors. High home equity can make another option, refinancing or a carefully documented property arrangement more relevant.

The composition of the debts matters as much as the total. Court fines, maintenance liabilities, student loans, secured borrowing and debts linked to fraud may not be discharged in the same way as ordinary unsecured credit. A proposal dominated by debts that will remain payable may offer little practical benefit even if the £5,000 threshold is met.

List every creditor, current balance and account type.
Separate ongoing mortgage, rent, utilities and household liabilities from arrears.
Disclose jointly owed debts; the other borrower can remain liable for the whole balance.
Obtain current values and finance settlement figures for significant assets.
Explain expected inheritances, compensation, business interests and other possible windfalls.

Important exceptions

Some cases cannot be combined or started in the usual way

AiB's current guidance says two debtors cannot grant one joint trust deed. Married couples, civil partners and people with joint debts must each be assessed separately, even where their budgets and assets overlap. One person's discharge also does not remove the other person's liability for a joint debt.

A person whose trustee in bankruptcy has not yet been discharged cannot grant a trust deed. Previous insolvency, an existing DAS, creditor court action and company or partnership interests also require the sequence of events to be checked. (AiB: who can grant a trust deed)

Employment and directorship need their own checks

A trust deed can affect employment contracts, professional permissions, business finance and company directorship. These are consequences to investigate before signing, not simple online pass-or-fail criteria.

Application process

A proposal still has to be advised, documented and accepted

Only a licensed Insolvency Practitioner can arrange the deed and act as trustee. The assessment normally needs wage slips or income evidence, bank statements, benefit letters, household bills, a complete creditor list and details of property, vehicles and other assets. The trustee uses those facts to prepare the proposal and explain its consequences. (mygov.scot: how to get a trust deed)

For deeds granted after 20 January 2025, the debtor must receive the prescribed AiB information. Current AiB guidance requires at least three calendar days to consider the advice and material, excluding both the day it is supplied and the day of signing. (AiB: adequate time)

Even a carefully assessed proposal is not protected immediately. Creditors receive five weeks to respond. A majority objection by number, or objections representing at least one third of debt value, prevents protection unless the issue is resolved.

FAQ

Eligibility questions

What is the minimum debt for a protected trust deed?

At least £5,000 of total debt is required for protected status. Debt level alone does not make the arrangement suitable.

Must you currently live in Scotland?

Not necessarily. For a living debtor, the current legal test is habitual residence or an established place of business in Scotland at some point during the year before the deed is granted.

Can benefits be used for trust deed contributions?

No contribution may be taken from Universal Credit, tax credits or social security benefits. AiB guidance also recognises asset-realisation-only deeds, so someone relying on benefits needs case-specific assessment rather than an online eligibility promise.

Can a couple enter one joint trust deed?

No. AiB says two people cannot grant one joint deed; their estates and trust deeds must be treated separately. Joint debts and jointly owned assets still need to be assessed in each case.

Can a homeowner qualify for a trust deed?

Potentially, but ownership does not make the home safe. Equity, secured lending, joint ownership and any proposed exclusion or buyout must be assessed before signing.

Sources

Authoritative material used for this guide

This guide is general information and cannot decide whether a trust deed is available or suitable for an individual. Current legislation and AiB guidance take priority over older summary checklists.

Sources checked and page reviewed on 11 July 2026.

Who can qualify for a trust deed in Scotland?