This question usually arrives at a bad moment. The washing machine has gone, the car has failed its MOT, and the budget your trustee agreed has no line in it for either.

Here is the offence that does not reach you, the warning that does, and what to do instead. What a protected trust deed is covers the solution itself.

No. The offence exists, but it is written for sequestration and it does not reach a protected trust deed debtor, because the two definitions that make it work both stop at sequestration.

What section 218(13) says

Section 218(13) of the Bankruptcy (Scotland) Act 2016 makes it an offence for a debtor to obtain credit of £2,000 or more, or of any amount where the debtor already has debts of £1,000 or more, without giving the lender the relevant information about the debtor’s status.

Read alone, that sounds like it catches anyone in a formal debt solution. Read with the next section, it does not.

What section 219(2) does to it

Section 219(2) defines the relevant period as running from one year before the date of sequestration of the debtor’s estate until the debtor’s discharge.

It then defines the relevant information about the debtor’s status as covering three things: that the estate has been sequestrated and the debtor is not discharged, that the debtor is an undischarged bankrupt in England, Wales or Northern Ireland, and that a bankruptcy restrictions order or undertaking applies.

The words trust deed appear nowhere in either section. There is no offence, and no statutory duty to tell a lender you are in one.

Sequestration and a trust deed, side by side

Most of what is written about this online is English individual voluntary arrangement material with the words swapped. What a protected trust deed is sets out why the two schemes are not comparable.

It requires your trustee to warn you, before you sign, that granting the deed may result in you being refused credit. That is section 167(3)(a)(ii), and it is a warning about the market rather than a prohibition in law.

The wording is broader than people expect

The warning under section 167(3) covers being refused credit whether before or after your discharge under section 184. So the Act itself contemplates the effect outlasting the deed.

It sits alongside the other things your trustee has to raise, including the possible effect on your employment and the public disclosure of the deed.

And your own deed has terms

A trust deed is a document you grant, and it will say things about your conduct during the payment period. Ask your trustee what yours says about new borrowing, in writing, rather than assuming there is a national rule.

Because the deed is on your credit file and on a public register. A protected trust deed reaches the credit reference agencies through a daily data feed out of the Register of Insolvencies, and lenders can also search the register directly.

Two records, not one

The credit file entry runs for six years on the agencies’ own published schedules, and how long a trust deed stays on your credit file explains where that period comes from and why it is not a legal rule.

The register entry is separate, free and open to anyone. Whether your trust deed appears on the Register of Insolvencies covers what it shows.

mygov.scot puts the practical position plainly

Its page on how a trust deed could affect you says you can still apply for credit, but it may be more difficult to get accepted and it may affect your ability to make payments to your trust deed.

Every hard search leaves a footprint of its own, with its own retention period. Applying in order to find out where you stand therefore leaves a mark whatever the answer is.

Because the new creditor sits outside the arrangement entirely, and the repayment comes out of money the deed has already promised to somebody else.

The new creditor is not bound and the new debt is not released

mygov.scot is blunt about the first half. Creditors you take on after signing are not bound by the trust deed and can pursue action against you independently.

The second half is statutory. Section 184(6) and the related provisions exclude from your discharge any liability arising after the date the deed was granted, so a debt taken on now survives the end of the deed.

It competes with the contribution

Section 168(5) of the 2016 Act puts the whole of your surplus income, meaning total income less allowed expenditure, towards creditors during the payment period.

A new repayment has to come out of allowances your trustee already assessed as reasonable, and it will show at the annual review. How trust deed monthly payments are calculated explains how the figure is set.

And if the contribution slips

After two consecutive missed payments, section 174 lets the trustee ask you to instruct your employer to deduct the contribution, and to instruct the employer directly if you do not.

Further down that road, a discharge can be refused and creditors cease to be deemed to have acceded. What happens if you miss a payment on your trust deed sets out the escalation in order.

They all share the same core problem. The debt is created after the deed was granted, so the deed does not cover it and your discharge does not release it.

Type by type

Two things that catch people out

On joint debts, mygov.scot states that where you share a debt with someone else, that person becomes solely responsible for the payments once you enter a trust deed. Its assets and income page is worth reading before you sign rather than after.

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.

mygov.scot says otherwise, and it is not a statutory disqualification. Whether you have to tell your employer about your trust deed sets that out in full, including where a real restriction can come from.

Nothing stops you. Part 14 of the 2016 Act contains no travel provision at all, your passport is not affected, and you do not need your trustee’s permission to leave the country.

The constraint is arithmetic, not law

Your contribution is the whole of your surplus income under section 168(5), assessed against the trigger figures published as part of the Common Financial Statement. A holiday comes out of what is left after that.

So the question is not whether you are allowed. It is where the money is coming from.

The answer must not be a missed payment

Two consecutive missed contributions are the statutory trigger for the employer instruction under section 174. What happens if you get a pay rise during a trust deed covers the other direction, where extra income has to be reported too.

Tell the trustee if you have saved for it

The Accountant in Bankruptcy’s guidance for trustees requires all assets to be disclosed whether or not the trustee intends to realise them, and warns that deliberate non-disclosure may constitute a common law offence.

An unexplained lump sum leaving your account looks like an undisclosed asset. A sentence at the annual review costs nothing and prevents that.

Go to your trustee before you go to a lender. A change in your circumstances can justify modifying the contribution amount or the repayment timeframe, and neither of those puts a new creditor outside the deed.

Five things to do first

On the fourth row, what the Scottish Welfare Fund is and whether it can help with debt sets out what the two grants cover and what they do not.

There is no statutory payment break

The six-month break some readers have seen described belongs to a Debtor Contribution Order in bankruptcy. In a trust deed the equivalent relief is an extension of the payment period, with the Accountant in Bankruptcy notified under section 180.

Free, impartial advice on any of this is available from Citizens Advice Scotland, StepChange and National Debtline. Whether to use a free debt charity or a paid debt adviser covers that choice, and our trust deed page sets out how we help.