What Is a Protected Trust Deed? Scotland Guide

The distinction

A trust deed is not protected from the moment it is signed

A trust deed begins as an agreement under which a debtor transfers rights in their estate to a trustee for the benefit of creditors. The trustee must be a licensed Insolvency Practitioner. Signing the document is important, but it does not by itself force every creditor to accept the proposal.

The statutory protection process is what changes the position. The trustee sends the proposal to creditors and gives them an opportunity to object. The deed gains protected status only if the required conditions are met and the protection is recorded by Accountant in Bankruptcy. The Scottish Government's consumer guide therefore distinguishes an ordinary trust deed from a protected one. (mygov.scot: what is a trust deed)

Why the word “protected” matters

If a deed does not become protected, creditors who have not agreed to it can still pursue what they are owed and may ask the court to make the debtor bankrupt. A promise that a proposed deed will definitely become protected would therefore be misleading.

Creditor response

How protected status is decided

Creditors normally receive five weeks to consider the proposal. Protection is prevented if a majority object by number, or if creditors holding at least one third of the total debt value object. Creditors who do not respond are not counted as objecting. The trustee can discuss objections with creditors, but an unresolved blocking level means the deed cannot be protected. (mygov.scot: how to get a trust deed)

The Insolvency Practitioner prepares the proposal after reviewing debts, income, spending and assets.
The debtor signs after receiving the required information and consideration time.
The trustee notifies creditors and provides the proposal.
Creditors have the statutory response period in which to object.
If the conditions are satisfied, Accountant in Bankruptcy records the protected status in the Register of Insolvencies.

The legal framework sits in Part 14 of the Bankruptcy (Scotland) Act 2016. The Act covers how protection is obtained, what protection does, creditor rights and the discharge of the debtor and trustee. (Bankruptcy (Scotland) Act 2016, Part 14)

Once protected

What protection changes—and what it does not

When protection is in place, included creditors are normally bound by the arrangement. They cannot collect the included debt directly, add further interest or charges to it, or begin court action for non-payment while the debtor keeps to the terms. Creditors can still send documents they are required to provide, including statements; receiving a statement does not necessarily mean collection action has restarted. (AiB: protected trust deed information document)

Protection applies to debts and creditors covered by the deed. A secured lender retains its security, ongoing mortgage or rent payments still need attention, and some liabilities cannot be discharged. New debts taken on after signing are not added to the existing deed. Those distinctions should be explained before the proposal is accepted.

Five weeksNormal creditor response period before protection is decided.
Public recordThe protected deed is entered in the Register of Insolvencies.
Included debtsProtection does not turn secured, excluded or new debts into included debts.

Administration

The trustee manages contributions, assets and creditor claims

The trustee works out what the debtor can afford after reasonable household costs. The assessment must account for genuine needs, including disability and caring costs. The trustee also identifies assets that may provide value, checks creditor claims, takes the permitted fees and distributes available funds according to the statutory process.

A valuable asset does not always have to be sold immediately. Depending on the facts, another person might buy the debtor's interest or additional payments might be agreed. Equally, a home, vehicle or other asset cannot be described as automatically safe. The written proposal must make clear how each significant asset will be treated. (AiB key facts)

The debtor has continuing duties

Make the agreed payments on time.
Give the trustee accurate information and requested documents.
Report changes in income, spending and household circumstances.
Tell the trustee about inheritances, compensation, bonuses or other new money.

Completion

Duration and discharge are related but not identical

Income contributions normally run for 48 months. The period can be longer if the original proposal provides for it, payments are missed, or property and other assets need more time. Once the debtor has made the required payments and cooperated, the trustee applies for the debtor's discharge. The trustee can remain in office after that while the administration is completed.

On successful completion, the debtor receives confirmation that qualifying debts included in the PTD are written off. A failure to pay or cooperate can instead lead to an extension, deductions from earnings, refusal of discharge or bankruptcy risk. Money already paid is not simply returned if the arrangement fails. (AiB information for debtors)

Decision stage

Information and comparison should come before commitment

For deeds granted after 20 January 2025, the prescribed AiB information document must be provided before signing. Current AiB guidance also requires adequate time to consider that information. This is intended to create space to ask questions, compare alternatives and take further advice rather than treating the signature as an immediate sales decision. (AiB: protected trust deed resources)

Before signing, the proposal should answer at least these questions:

Which debts and creditors are included, and which remain separate?
What payment is required, for how long, and how can it change?
How will the home, car, savings and possible windfalls be treated?
What fixed fee, percentage fee and outlays will the trustee take?
What happens if protection is refused or the arrangement later fails?
Why is the proposal more suitable than DAS, bankruptcy or an informal arrangement?

FAQ

Questions about protected status

Is signing a trust deed the same as having a protected trust deed?

No. Signing creates the trust deed, but it binds every included creditor only after the statutory protection process succeeds and Accountant in Bankruptcy records the protected status.

How long does a protected trust deed usually last?

Income contributions normally run for 48 months. The arrangement can last longer if payments are missed or an asset such as home equity still has to be dealt with.

Can creditors object to protection?

Yes. Protection is blocked if a majority of creditors object by number, or creditors holding at least one third of the total debt value object, during the five-week response period.

What happens if the trust deed is not protected?

Creditors who are not bound can continue recovery action and may ask a court to make the debtor bankrupt. The insolvency practitioner or money adviser should explain the available next steps.

Sources

Authoritative material used for this guide

This page is general information, not personal debt advice. The source material should be checked again when the page is reviewed because legislation and official guidance can change.

Sources checked and page reviewed on 11 July 2026.

What is a protected trust deed?