The rules sit in Part 14 of the Bankruptcy (Scotland) Act 2016, which applies to trust deeds granted on or after 30 November 2016.

Here is the gap between signing and protection, how creditors can stop it, what happens to money you receive in the four years afterwards, and what protection does to enforcement already running.

A deed conveying your estate to a trustee for the benefit of your creditors generally. It is granted by you rather than negotiated with creditors, whose only role is to accede, to object, or to do nothing.

What the deed has to say

Section 167(1) requires two things in the wording. All of your estate is conveyed to the trustee, apart from property listed in section 88(1) and any dwellinghouse excluded under section 166, and you agree to convey estate acquired in the following four years.

The section 88(1) exclusions run off the protected goods rules in the Debt Arrangement and Attachment (Scotland) Act 2002, so essential household items inside your home do not vest.

What protection adds

An unprotected trust deed does not bind a creditor who refuses to accede, and that creditor can sue, do diligence and petition for your sequestration as though the deed did not exist. A protected trust deed binds all creditors.

Section 172(1)(a) is the mechanism. A creditor who was not notified, or who objected in time, has no higher right to recover the debt than one who acceded.

Yes. Section 164(3) requires your total debts, including interest, to be not less than £5,000 at the date you grant the deed.

There is a ceiling at the other end too

Section 168(4) refuses protection where you could pay in full. For an individual, contributions across the payment period have to total less than your total debt including interest at the date of granting.

So a trust deed is squeezed from both directions. The Debt Arrangement Scheme has no minimum and no maximum debt, so ask an adviser which of the two your own figures leave open.

Who can grant one

A living individual, a partnership, a limited partnership, a trust, a corporate body or an unincorporated body may grant a deed under section 164(1). Limited companies and limited liability partnerships cannot.

Since 1 July 2024, section 164(1A) has required a sufficient connection to Scotland. For an individual that means habitual residence in Scotland, or an established place of business here, at any time in the year before the deed is granted.

A previous sequestration is not an automatic bar. Section 164(2)(a) bars you only where the trustee in that sequestration has not yet been discharged.

Adding the statutory steps together gives a floor of roughly six weeks from signing, and an outer limit of roughly eleven to twelve weeks. Those are the periods the Act allows rather than an observed average.

The steps, and the clock on each one

The gap matters because section 173 bites on the date of protection and not on the day you sign. Enforcement is not touched by your signature.

Miss the four-week deadline at section 171 and the deed is not protected. It stays an ordinary trust deed unless a sheriff directs that it be presented again.

The three calendar days before you sign

Scottish Ministers’ guidance under section 167(5) sets adequate time at a minimum of three calendar days. Neither the day the materials are delivered nor the day the deed is signed counts towards it.

Use them, and ask what cover is available for the weeks that follow. A statutory moratorium is the thing to ask about.

A statutory moratorium gives six months of protection and you get one per rolling 12 months. It stops service of a charge for payment, stops new diligence and stops creditor petitions for sequestration.

Whether a creditor can carry on an earnings arrestment your employer is already operating is treated differently in the Accountant in Bankruptcy’s adviser guidance from the general statement of the rule. Ask a money adviser to confirm the position on your facts before relying on it.

How a moratorium protects you covers the six months in full, including the one per rolling 12 months limit.

By objecting in writing within five weeks. Protection is prevented where objections come from a majority in number of the notified creditors, or from not fewer than one third in value.

The test runs the opposite way to an English arrangement

Section 170(2) is an either or test rather than a cumulative one. One creditor holding a third of the value can block protection on its own.

Creditors who do not respond are deemed to have acceded. Silence is agreement here, which is the reverse of an arrangement that has to be voted through.

What an objecting creditor can still do

A creditor who was not notified, or who objected in time, may petition the sheriff court for your sequestration within five weeks of registration of the section 169 notice.

After that window a petition needs more. The creditor has to aver that the provision for distribution is or is likely to be unduly prejudicial, or that the trustee has refused to discharge you.

An earnings arrestment ceases to have effect on the date of protection, and no new one may be executed. The trigger is the date the Accountant in Bankruptcy registers the deed, not the day you signed it.

What section 173 reaches, and what it does not

The bottom half of that table is the honest part. Part 14 says nothing about a bank arrestment already executed, so put that question to a money adviser rather than assuming it falls away.

Money already taken from your wages

Money already taken is credited against the debt and is not usually refunded. Check the position with the creditor.

How long a wage arrestment lasts covers what otherwise brings one to an end.

Your trustee has an equivalent power over your pay if contributions stop. After two consecutive missed payments, section 174 allows the trustee to instruct your employer to deduct the contribution and remit it.

It has to be conveyed to the trustee. Section 167(1)(b) binds you to convey estate acquired in the four years after granting that would have been conveyed had you owned it on day one.

The four-year clause after you sign

An inheritance, a windfall or a lump sum received inside that window vests in the trustee. The four years run from the date the deed is granted.

Tell your trustee about anything you receive. Section 168(3) separately gives creditors the whole of your surplus income, meaning total income less allowed expenditure.

The payment period is a different four years

Section 168(2) sets the payment period at 48 months beginning with the date the deed is granted. It can be shorter where you could pay in full sooner, and longer where contributions have been missed or where you and the trustee agree.

There is no statutory payment break in a protected trust deed. The equivalent relief is an extension of the payment period under section 168(2)(c), with notice to the Accountant in Bankruptcy under section 180.

No. Your trustee has to apply for your discharge on Form 5, and the date of discharge is the date the Accountant in Bankruptcy registers that application.

What the application has to say

Section 184 requires a statement that you met your obligations under the deed and co-operated with the administration of the trust. The Accountant in Bankruptcy can refuse to register it.

Where AiB refuses, any party may appeal to the sheriff within 21 days. Where the issue can be put right, the trustee may submit the form again.

Where discharge can be refused outright

Since 1 July 2024, a trustee who considers that you have unreasonably failed to comply or have not co-operated must apply to AiB on Form 5A under section 184A. The trustee no longer refuses on their own.

The consequence is set out in section 172(2). Where AiB agrees that you should not be discharged, creditors cease to be deemed to have acceded, so protection can be undone by non-compliance.

Sections 184B and 184C, also from 1 July 2024, allow early discharge where circumstances beyond your control prevent you meeting your obligations with no reasonable prospect of recovery before the 48 months end.

Court fines and penalties, liabilities from fraud or breach of trust, student loans, aliment and child maintenance, and any secured lending. Discharge reaches the debts you owed when the deed was granted and no further.

The debts that survive

Council tax arrears accrued before you sign can be included. The current year’s council tax cannot, in the same way it cannot go into a Debt Payment Programme, and the same goes for rent, mortgage, insurance and utility bills.

Interest, stated precisely

Claims in a trust deed are valued as at the relevant date, so interest accruing after the date of granting is not part of a creditor’s claim. That is a narrower statement than saying interest and charges stop, and it is the one the sources support.

A trust deed also closes off other routes while it runs. You cannot apply for your own sequestration under section 172(1)(b), and you cannot apply for a Debt Payment Programme from the date of granting until the deed terminates.

A joint debt does not go away for the other person. Official guidance on debt and diligence in Scotland sets out how the alternatives compare, and sequestration is the other formal route.