The real questions for someone self-employed are different ones. Can you keep trading, what happens to the van and the tools, and does the business bank account survive.

Those are the ones this page answers. How much debt you need for a trust deed in Scotland and whether you have to live in Scotland to get one cover the eligibility conditions.

Sole traders, partnerships, limited partnerships, trusts and unincorporated bodies. Limited companies and limited liability partnerships cannot, because section 164(2)(b) excludes the entities referred to in section 6(2).

How you trade, and what follows from it

Section 164 is where the list sits, and the Accountant in Bankruptcy confirms that limited companies and LLPs are outside it.

If you trade through a company

The company and you are separate. A trust deed granted by you deals with your personal estate, and the company’s debts are a different problem with different remedies.

Personal guarantees are the usual bridge between the two. A guarantee you have given is your own debt and goes into the assessment like any other.

Nothing in Part 14 stops you, and the Act plainly contemplates a debtor who is still trading. What it does not do is say who decides, so this is a question to settle with your trustee in writing before you sign.

What the Act shows

Section 173A stops insolvency-related termination terms in business supply contracts taking effect once a trust deed becomes protected, for contracts entered into on or after 1 August 2017. That provision in Part 14 of the Bankruptcy (Scotland) Act 2016 only makes sense if the debtor may still be trading.

A supplier can still terminate with the trustee’s consent, with the court’s permission on hardship grounds, or where charges stay unpaid after 28 days. So it is a protection against automatic cut-off, not against every termination.

What the Act does not say

There is no provision anywhere in Part 14 that decides whether the business carries on, and none was found elsewhere. What section 167(3)(a)(vi) does require is that the trustee advises you, before you sign, of the possible damage to your business interests and employment prospects.

That duty tells you where the conversation belongs. Get the trustee’s answer on trading in writing before the deed is granted, rather than assuming it either way.

The test that happens before you even get there

Before accepting appointment, the trustee must be satisfied that a trust deed will benefit your creditors generally, which comes from the definition in section 228(1). Where the business is the main asset, that assessment covers the business.

A trust deed takes exactly what a Scottish bankruptcy would take. For a sole trader that includes the business assets, because a sole trader’s business assets are personal assets.

The formula, and it is wider than section 88(1)

Section 167(1)(a) conveys all of your estate other than the property listed in section 88(1), or which would be excluded from vesting on sequestration under any other provision of the Act or of any other enactment.

That last clause is doing more work than most guidance notices. Anything a Scottish bankruptcy would leave with you survives a trust deed too, and nothing else does.

Where the tools and the van sit

Section 88(1)(a) routes through to section 11(1) of the Debt Arrangement and Attachment (Scotland) Act 2002, which is why the exempt figures come from attachment law rather than from bankruptcy law.

The vehicle figure, stated properly

The statutory exemption for a reasonably required vehicle is £1,000, and the £3,000 you will see everywhere is AiB practice rather than the exemption. Whether you will lose your car in a trust deed sets out the whole chain.

Get the figure your trustee will apply, and how they will evidence it, in writing before you sign. AiB expects vehicle valuations from a recognised guide.

Disclose everything, including what you expect to keep

All assets must be disclosed whether or not the trustee intends to realise them, and AiB warns that deliberate misinformation or non-disclosure may constitute a common law offence.

The trustee also has to explain to creditors why any asset is not being fully realised. An undisclosed van does not stay hidden for long.

Nothing in Part 14 addresses the account you use day to day, and no rule about it was established in the sources behind this page. Any balance in the account at the date of granting is estate.

What the sources do and do not settle

Granting a trust deed is an act of apparent insolvency under section 16(1)(e), and the deed is published on the Register of Insolvencies. Whether your trust deed will appear on the Register of Insolvencies covers the entry itself.

What no source establishes is what any bank then does about a business account or facility. No provision of Part 14 requires a bank to do anything, and this page will not guess at the rest.

What to sort out before you sign

• Ask your trustee about the account you take payments into, and get the answer in writing.
• Ask what happens to a balance sitting in the account on the day you grant the deed.
• Ask what happens to a direct debit or standing order that your customers rely on.

Any balance in the account at the date of granting is estate, so this is not only a question about access. Whether you can get credit or borrow money during a trust deed covers the borrowing side.

For a sole trader, yes. There is no line between business and personal debt in your estate, so trade creditors, tax arrears and business borrowing sit alongside your credit cards.

What that means for the £5,000

Trade creditors, business borrowing and tax arrears count towards the statutory minimum in section 164(3) in the same way as personal credit, and how much debt you need for a trust deed sets out the test.

Where HMRC sits

Tax arrears owed at the date of granting form part of the debts in the deed. Liabilities arising after that date do not, and they have to be paid as they fall due.

That split matters more for someone self-employed than for anyone else, because the next return is always coming. Which debts cannot be included in a trust deed sets out what survives discharge.

The same way as anyone else’s. Section 168(1) requires contributions from income rather than from wages, and the whole of your surplus goes to creditors under section 168(5).

The difference is evidence, not method

Expenditure is tested against the Common Financial Statement trigger figures, which are the specified method under regulation 15 of the Bankruptcy (Scotland) Regulations 2016 and which AiB last revised on 1 April 2025.

Lumpy income

The trustee reassesses at least annually, and a material change can justify modifying either the contribution or the length of the payment period, with AiB notified under section 180. How trust deed monthly payments are calculated sets out the assessment.

Say at the assessment stage if your good and bad months are very different. Hoping it averages out is how a contribution becomes unaffordable in month seven.

There is no payment break

The six-month statutory payment break people read about belongs to Debtor Contribution Orders in bankruptcy. 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). Your trustee may agree to a break in payments as a matter of practice, which is a different thing from an entitlement.

Tell the trustee straight away. Section 174 works by an instruction to an employer, so where there is no employer the mechanism has nothing to attach to, and that makes early contact more important rather than less.

What section 174 does, and where it stops

After two consecutive missed contributions the trustee may require the debtor to instruct their employer to deduct and remit, and may instruct the employer directly if the debtor does not. How trust deed payment instructions to employers work covers the mechanism in full.

None of that reaches a sole trader with no employer. What it does not mean is that missing payments is consequence-free.

The consequence that does reach you

Under section 2(1)(b)(iv) a trustee may petition the sheriff where the debtor has failed to comply with an obligation under the trust deed or with a reasonable instruction, and avers that sequestration is in the best interests of creditors. What happens if you miss a payment on your trust deed covers the sequence.

What is not a proper reason to refuse your discharge

• A change of circumstances that prevents you paying a contribution.
• Extenuating circumstances that stop you meeting your obligations.
• Assets realising less than the trustee first estimated.

Since 1 July 2024 a trustee has to apply to AiB on Form 5A for agreement before a discharge is refused, and there is a right of appeal to the sheriff. What happens if your trust deed fails sets out where that leads.

Visibility and business relationships. The Act itself requires your trustee to warn you that granting the deed may result in damage to your business interests and employment prospects.

The statutory warning, in its own words

Section 167(3)(a)(vi) puts that among the things the trustee must advise you about before you grant the deed, alongside the risk that the fact of granting becomes public information.

That is a risk Parliament required you to be warned about rather than a prohibition on anything. For somebody who wins work on reputation it is a real consideration.

Where the visibility comes from

AiB’s protected trust deed information document says the entry appears on the Register of Insolvencies for the deed’s duration plus 12 months after completion, and how long a trust deed stays on your credit file covers the separate credit record.

Being a company director is not restricted by a trust deed as a matter of law. The disqualification in section 11 of the Company Directors Disqualification Act 1986 applies to an undischarged bankrupt, which someone in a protected trust deed is not.

Weigh it against the alternative

If diligence is already running, a solution that ends it may be worth the visibility, and whether a wage arrestment affects self-employed people covers what a creditor can reach when there is no employer to serve.

Compare all three formal routes on your own accounts, with somebody who has nothing to sell you. Our trust deed page sets out how the solution works, and the Debt Arrangement Scheme is the route that avoids insolvency.