Check If You Qualify

What’s the difference between a protected and unprotected Trust Deed?

Reviewed 13th February 2024

What does it mean when a Trust Deed becomes protected?

A Scottish Trust Deed is a formal debt procedure that enables you to pay off a proportion of your debts when they have become unaffordable. Any amounts remaining at the end of the Trust Deed are written off, offering you a fresh financial start.

Trust Deeds can be protected or unprotected, and it’s important to know the difference between the two. Essentially, whether or not a Trust Deed becomes protected depends on the proportion of creditors that vote in its favour.

If you own property you’ll also have to include it in order for the Trust Deed to become protected. If there’s equity in the property it may be used to repay some of your debts, although unlike sequestration, you may not need to sell your home.

David Tannock

David Tannock

Debt Adviser

Call: 0800 0639 250

Debt Calculator

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

How do Trust Deeds work?

The purpose of a Trust Deed is to enable a debtor who is struggling to keep up with repayments to pay off their unsecured debts to the best of their financial ability. A new instalment plan is negotiated to repay over an extended period of time, typically four years.

Creditors included in the Trust Deed must vote on whether to accept the new arrangement within five weeks of the proposal being made. The problem is that some may veto the Trust Deed if they believe they can recover more of their debt via a different route, such as compulsory liquidation.

Creditors vote to reject or protect the Trust Deed

Creditors have five weeks to vote on the proposal, and if sufficient numbers vote in favour the Trust Deed is protected. In order to become protected, 50% or more of creditors, or creditors representing more than 33% of the total debt, must vote for the Trust Deed.

During this five‐week period objections might be raised by creditors and then settled by the insolvency practitioner, or there may be no objections at all. In either case, the Trust Deed will become legally binding.

What are the implications of an unprotected Trust Deed?

If a Trust Deed is unprotected it means that creditors aren’t legally obliged to accept the proposed repayments and may still undertake legal action against your business, leaving you at risk of being forcibly wound up.

A further consequence of an unprotected Trust Deed is that charges and interest can be added to your debts. These additional amounts can significantly increase the overall amount that you owe.

The difference between protected and unprotected Trust Deeds

For a Trust Deed to achieve its main aim of helping you pay off unaffordable debt, it’s important to gain protected status. This makes the new arrangement legally binding, and provides you with certainty over your repayments.

Your creditors cannot take legal action against you as long as you pay the required monthly amount. Furthermore, there won’t be any additional charges or interest and you will no longer have to face creditor pressure in relation to these debts.

It’s important to seek trusted advice and guidance when considering a Scottish Trust Deed ‐ a reputable company will only put forward Trust Deed proposals they believe are likely to be sanctioned by creditors.

Scotland Debt Solutions has been helping Scottish residents to escape debt since 1989, and can establish whether a Trust Deed is your best option. If so, we’ll put forward a solid proposal to your creditors and support you throughout the process.

Please get in touch with our expert team for more information and independent advice. We operate offices throughout Scotland and can offer you a free, same‐day meeting to discuss your situation.

Debt Report

Get your instant Debt Report today

Find out which debt solution is best for you

Our debt report is completely easy to use and is a great starting point for anyone with over £5000 of debts looking to take control of their debt issues. By providing us with details of your incomings and outgoings we can suggest the most appropriate way forward for you.

Get Your Report
Debt Report V2

Related News

Debt Levels Soaring across Scotland, New Figures Show Debt Level Rising

Debt Levels Soaring across Scotland, New Figures Show

Levels of unsecured debt in Scotland increased dramatically during 2022 as the cost of living crisis took its toll on household finances.

Nearly Half a Million Scots Facing ‘Profound Financial Hardship’ Financial Hardship

Nearly Half a Million Scots Facing ‘Profound Financial Hardship’

Close to half a million Scots are in a position of profound financial hardship, according to a new set of figures.

Scots with Disabilities Urged to Check Eligibility for New Benefits Scottish Man In Wheelchair

Scots with Disabilities Urged to Check Eligibility for New Benefits

Disabled people in Scotland are being urged by the government to check whether they might be eligible for benefits that could help make their life a little easier.

FAQ

FAQ on Trust Deeds

Services

Our Other Services

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
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
Sequestration

Sequestration

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
map pin

Glasgow

2 Bothwell Street, Glasgow, G2 6LU

The Team

Meet our qualified Scottish based team

100% Confidential Advice

Chelsea Williams David Tannock Sharon McDougall Square Kelly Jones

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.

The Team

Meet our qualified Scottish based team

100% Confidential advice

Chelsea Williams Thomas Mckay Kelly Jones Tannock1

Tools

Useful Tools

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
Instant Scheduled Call & WhatsApp
Headset

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
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

More on Trust Deeds

We can help you with...

Advantages of a Protected Trust Deed
Icon Note

Advantages of a Protected Trust Deed

Find out More
Can I replace my Trustee during a Trust Deed Arrangement if i'm unsatisfied?
Icon Note

Can I replace my Trustee during a Trust Deed Arrangement if i'm unsatisfied?

Find out More
Differences between a trust deed and debt arrangement scheme (DAS)
Icon Note

Differences between a trust deed and debt arrangement scheme (DAS)

Find out More
Differences between a Trust Deed and Sequestration (Bankruptcy)
Icon Note

Differences between a Trust Deed and Sequestration (Bankruptcy)

Find out More
Disadvantages of a Scottish Trust Deed
Icon Note

Disadvantages of a Scottish Trust Deed

Find out More
How long does a trust deed stay on your credit file?
Icon Note

How long does a trust deed stay on your credit file?

Find out More
How to improve your credit score after a Scottish Trust Deed
Icon Note

How to improve your credit score after a Scottish Trust Deed

Find out More
Is it possible to enter into a second Trust Deed?
Icon Note

Is it possible to enter into a second Trust Deed?

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
What debts can I include in a trust deed?
Icon Note

What debts can I include in a trust deed?

Find out More
What happens to my Trust Deed if I’m unemployed or lose my job?
Icon Note

What happens to my Trust Deed if I’m unemployed or lose my job?

Find out More
What happens when a Trust Deed ends?
Icon Note

What happens when a Trust Deed ends?

Find out More
Will I Lose My Home If I Enter Into a Trust Deed?
Icon Note

Will I Lose My Home If I Enter Into a Trust Deed?

Find out More
Will my creditors agree to my trust deed?

Will my creditors agree to my trust deed?

Find out More

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