A protected trust deed does not automatically mean losing everything, but valuable assets and your share of home equity must be assessed before you sign.
Short answer
When you grant a trust deed, rights in assets covered by the deed are conveyed to the trustee for creditors. You must disclose every asset, even where the trustee ultimately decides not to realise it. Accountant in Bankruptcy's current trustee guidance says deliberate misinformation or non-disclosure may be an offence. Source: AiB, section 2.10 Assets.
That does not mean every possession is sold. AiB says assets that would not vest in a Scottish bankruptcy are excluded from a protected trust deed, including property held on trust for someone else, assets exempt from attachment and most personal and occupational pensions. Its consumer information also says essential household items are not affected. Source: AiB protected trust deed information document.
Do not sell cheaply, transfer ownership to family, hide money or repay a favoured creditor in an attempt to qualify. Give the adviser and Insolvency Practitioner the full history and ask how any earlier transaction will be treated.
Property
Owning a home does not by itself rule out a protected trust deed. The key questions include who owns it, whether there is a secured loan, its current market value, the current mortgage redemption figure and how much of any equity belongs to you. Mygov.scot explains that, where a home is jointly owned, the trustee can take only the debtor's share of the property equity. Source: mygov.scot, Your assets.
AiB guidance requires a professional valuation and secured-debt redemption figures when an agreement is proposed in respect of heritable property. It also says creditors must receive a complete and realistic assessment rather than a speculative outcome. Source: AiB, section 2.12.
The outcome is not limited to an immediate sale. AiB's consumer document says a trustee can suggest alternatives such as a family member buying the debtor's share or the debtor making extra payments. Trustee guidance also describes agreements involving a payment by a specified date or additional monthly contributions after the initial 48-month payment period. A sale can still become necessary if the agreed route is not completed. Source: AiB key facts.
Scottish law allows a sole or main home with a secured loan to be excluded from a trust deed in certain circumstances. AiB says this should be considered where a secured creditor holds security and there is no, very little or negative equity. The secured creditor must agree not to claim in the trust deed; the mortgage terms continue and that secured debt is not discharged. A current valuation and redemption figure are required. Source: AiB, section 2.11.
Vehicles
There is no safe yes-or-no answer based only on the fact that you need a car. AiB says a valuable item such as a car might need to be sold, while other options may be available. The trustee should consider its ownership, realistic value and the amount that could actually be realised, alongside the reasons it is needed. Source: AiB protected trust deed information document.
If the vehicle belongs to you outright, give the trustee an accurate make, model, age, mileage, condition and valuation. Explain and evidence why it is needed—for example, work patterns, disability, caring duties or the absence of practical public transport. The proposal should say whether it will be retained, sold, replaced with a cheaper vehicle or dealt with through another payment.
A vehicle subject to finance is not the same as a car owned outright. The agreement determines ownership, termination rights and what the finance company can do. Give the practitioner the complete agreement, current settlement figure, monthly payment and any arrears. Ask the finance provider or adviser before changing payments: Citizens Advice warns that stopping payments on live car finance can harm a credit score and put the vehicle at risk. Source: Citizens Advice Scotland.
A car you use is not necessarily an asset you own. Provide registration, purchase and payment evidence so legal and beneficial ownership can be checked. If another person owns it, avoid informally changing the V5C or payment arrangement: the V5C records the registered keeper and is not, by itself, proof of ownership.
Ask for the assumed vehicle value, the evidence of ownership, whether the monthly finance cost is allowed in the budget and what event could change the decision. A verbal assurance that “your car will be fine” is not a substitute for a documented assessment.
Beyond property
The asset review is wider than a house and car. AiB directs trustees to identify and tell creditors about all assets conveyed under the trust deed and to explain why any asset will not be realised in full. Source: AiB asset guidance.
A protected trust deed can capture relevant property acquired after it is granted. AiB's home-exclusion guidance describes the standard deed statement conveying qualifying estate acquired during the four years beginning with the grant date. Mygov.scot also says a person must tell the trustee about a windfall such as an inheritance or lottery win, which may be used for creditors. Source: mygov.scot, changes in circumstances.
Timing, the type of asset and the wording of the deed matter. Tell the trustee as soon as a right to money arises—not only when cash reaches your account—and do not spend or transfer it until its treatment has been confirmed.
Before signing
Gathering evidence early makes it easier to compare the proposal with alternatives such as the Debt Arrangement Scheme or sequestration.
Mygov.scot says the Insolvency Practitioner will ask about assets, especially property and cars, and must produce a proposal setting out the repayment plan. Read the complete proposal and supporting asset figures before signing. Source: mygov.scot, How to get a trust deed.
FAQ
Possibly, but it is not automatic. The trustee must assess your share of the equity. Depending on the facts and the proposal, the home may be excluded with the secured lender's agreement, another person may buy the trustee's interest, equity may be addressed through extra payments or refinancing, or a sale may be required. Get individual advice before signing.
The trustee obtains a current professional valuation and current redemption figures for mortgages or other secured debts. The difference indicates the available equity before any case-specific adjustments. If you are a joint owner, the trustee is concerned with your share rather than the other owner's share.
A trust deed granted by one owner does not transfer the other owner's share to that person's trustee. However, the trustee may still need to realise the debtor's share, so joint owners should obtain advice about the practical options and any proposed agreement.
It depends on who owns it, its value, any finance agreement, whether it is reasonably needed and what the trust deed proposal says. A valuable vehicle may have to be sold or replaced with a less expensive one, while a modest vehicle needed for work, disability or family responsibilities may be treated differently.
Sometimes. Accountant in Bankruptcy says a trustee may suggest an option such as a family member buying your share of a house. Any payment must be properly valued, documented and agreed with the trustee; do not transfer or sell an asset privately to put it beyond creditors.
Tell the trustee immediately. An inheritance, lottery win or other new money received during the relevant period may have to be paid into the trust deed for creditors. The effect depends on timing and the deed's terms, so do not spend or give away the money before receiving advice.
Sources and scope
This guide summarises general rules and cannot determine what will happen to a particular asset. The signed deed, proposal, ownership evidence and individual advice control the outcome.
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