Check If You Qualify

Can I enter into a Trust Deed as a sole trader when my business is struggling?

Sharon McDougall - Updated - 1st May 2024 - 3 minutes to read

Being in debt as a sole trader can be particularly concerning because you are personally responsible for the debts of your business. Unlike a limited company which is a separate legal entity from its owners/directors, sole traders face the prospect of personal bankruptcy alongside the closure of their business.

There are a number of debt solutions that could help, however, and one of these is called a trust deed. It is only for Scottish residents, and allows you to repay a pre-agreed proportion of your debts, whilst writing off the remainder.

Are you eligible for a trust deed as a sole trader?

An insolvency practitioner, or money advisor, will let you know whether or not you meet the eligibility requirements for a trust deed. These include:

Clearly, if your business is struggling, making a regular monthly payment in this way might be difficult. It does not discount you, however, and your individual circumstances will be taken into account by the trustee.

The financial issues your business is experiencing may be viewed as temporary when looked at closely by your money advisor, who will see the whole picture of your personal and business finances combined.

Scotland Debt Calculator

Get a rough indication of what your repayments might be under each of our different debt solutions.

Your Total Debt

£0 - £5,000

£5,000 - £10,000

£10,000 - £20,000


Your Employment Status

I am employed

I am self-employed

I am unemployed

I am a student

I am retired

Your Total Monthly Income

£0 - £1,000

£1,000 - £2,000

£2,000 - £3,000


What can you pay monthly towards your debt?

£0 - £100

£100 - £200

£200 - £300


How does a protected trust deed work in practice?

Once your trustee has put together a proposal, creditors vote on whether to accept the monthly repayment and level of debt that will be written off at the end of the trust deed – a term usually lasting four years.

It is often in the creditors’ interests to agree a proposal, as the amount that can be recovered may be more than if you were sequestrated (the term for bankruptcy in Scotland).

The trust deed becomes protected if creditors agree to the terms, after which they are no longer able to take legal action against you in relation to the debts included. All charges and interest are also stopped, giving you a valuable breathing space to take back control of your business finances.

What unique issues might you face as a sole trader in these circumstances?

  • The nature of being a sole trader means that your income will fluctuate from month to month. This makes it difficult to establish a figure for your monthly repayment to the trust deed – for employed people, this is less of an issue as income is generally more stable. This problem can be addressed if your money advisor looks at your accounts, and uses historic and projected income figures to arrive at a fair estimation for the trust deed repayment.
  • If your business and personal bank accounts are held with the same institution, you will need to open a new business account with a different bank before the trust deed begins – the original accounts are likely to be closed down when you enter the trust deed.
  • You will not be able to access further business borrowing for the duration of the trust deed, and will find it very difficult to do so for some years afterwards. A note of the trust deed remains on your credit file for six years.

There are many considerations to take into account if you are thinking of entering a trust deed as a sole trader. Scotland Debt Solutions can make sure you understand the benefits and drawbacks, and provide the professional advice you need. Call our highly experienced insolvency practitioners to arrange a same-day appointment free-of-charge.

facebook colour icon linkedin colour icon messenger colour icon whatsapp colour icon email colour icon
Sharon McDougall Square

Sharon McDougall


Other Articles

9 practical tips for cutting your household expenses Household Expenses

9 practical tips for cutting your household expenses

We all want to save on our household bills and have more money in our pocket for the fun things in life. While bills are an unavoidable fact of life, here are some ways you can help to reduce them:

7 Advantages of using a Debt Arrangement Scheme to become debt-free Debt free happy woman

7 Advantages of using a Debt Arrangement Scheme to become debt-free

If you’re trying to deal with overwhelming amounts of debt, you may be eligible for the Debt Arrangement Scheme in Scotland.

10 steps to take now to improve your credit rating Credit Rating

10 steps to take now to improve your credit rating

If you are currently working on reducing the amount of debt you have, improving your credit score may not be at the top of your agenda.


Why Choose Us

Usp Discussion

Speak Direct With

A Qualified Adviser


We Don't Operate

Call Centres

Usp Location

5 Offices in Scotland

National Coverage

Usp House

Ask us About

Home Visits

Usp Award

Fully Regulated Advisors

From a Reputable Firm

Usp Hand Heart

Helping Scots Get

Out of Debt Since 1989

We'll give you a call

Our Scottish based team can help advise you on your debt problems.

Here at Scotland Debt Solutions we take your privacy seriously and will only use your personal information to contact you with regards to your enquiry. We will not use your information for marketing purposes. See our Privacy Policy.


Useful Tools

Personalised Debt Report
Usp Planner

Personalised Debt Report

Our personalised debt report will help you better understand your financial position and see where your money is going.

Debt Report
Instant Scheduled Call & WhatsApp

Instant Scheduled Call & WhatsApp

Arrange a call with an expert advisor at a time to suit you or contact our team via WhatsApp for immediate help and advice.

Arrange Callback
Find a Local Office
Usp Signpost

Find a Local Office

We have five offices located across Scotland. Find your nearest one here.

Find an Office


We can help you with...



Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debts

Find out More
Trust Deeds in Scotland

Trust Deeds in Scotland

A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.

Find out More
Debt Arrangement Scheme (DAS)

Debt Arrangement Scheme (DAS)

A Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.

Find out More
Business Debts
Icon Briefcase

Business Debts

Whether you are a sole trader or a limited company director, we can help you work through your current financial problems including money owed to HMRC

Business Debts

Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority

Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.

ICAS Insolvency Practitioners