It matters most where money is already leaving your pay. Section 173 cuts an earnings arrestment on the date of protection, which is why whether a trust deed stops a wage arrestment turns on a date rather than on a signature.

Part 14 of the 2016 Act came into force on 30 November 2016. Here is what signing does, how long the gap runs, what creditors can still do inside it, and what can be put in the way.

It conveys your estate to the trustee and makes you apparently insolvent. What it does not do is bind a creditor that wants nothing to do with it.

The conveyance

Section 167(1) requires the deed to state that all of your estate is conveyed to the trustee, apart from property that would not vest on sequestration and any dwellinghouse excluded under section 166. It also binds you to convey estate acquired in the following four years.

That much happens the moment you sign. What a protected trust deed is sets out what the trustee then holds.

Apparent insolvency

Granting the deed is itself an act of apparent insolvency under section 16(1)(e). AiB describes that as the legal foundation for the diligence protections that follow.

Those protections arrive with protection, not with your signature. The distinction is the whole of this page.

Ordinary against protected

An ordinary trust deed is a private arrangement. AiB’s guidance for trustees states that unprotected trust deeds do not obligate creditors who refuse to accept the terms.

A protected trust deed is binding on all creditors. Section 172(1)(a) gives a creditor who was not notified, or who objected in time, no higher right to recover than one that acceded.

What changes when, at a glance

Everything in the lower half of that table waits for registration. That is the shape of the problem in one page.

On the date AiB registers it in the Register of Insolvencies. Section 163 provides that the deed becomes protected when the conditions in sections 164 to 170 are met and AiB registers it, and protected status runs from that date.

The steps in order

Every deadline in that table is in section 163 and the sections around it, and the five week objection window is the immovable part.

How long the gap runs

Adding the statutory steps gives a floor of roughly six weeks from signing and an outer limit of roughly eleven or twelve. That is arithmetic from the legislation, because no average elapsed time is published.

Treat any specific figure you are quoted as an estimate. Ask instead for the date the trustee expects to present the deed to AiB.

If AiB refuses

Where AiB refuses because of concerns about expenditure allowances or contribution levels, there is a right of appeal to the sheriff. If the sheriff finds the deed meets the requirements, AiB registers it with effect from the date it was first presented, or a date the sheriff specifies.

Anything they could have done before you signed. A creditor that has not acceded can raise a court action, carry out diligence, and petition for your sequestration as though the deed did not exist.

What that looks like in practice

• An earnings arrestment already in place keeps deducting on every payday.
• A bank arrestment can still be executed, subject to the £1,000 protected minimum balance that applies to an arrestment in the hands of a bank.
• Sheriff officers acting on a summary warrant for council tax arrears can carry on.
• A creditor can raise an action and obtain a decree.

Whether a creditor holds off is a commercial decision

Once the pack arrives, a creditor knows a dividend is being proposed and that enforcement costs money. Holding off is a commercial choice rather than a legal duty.

Your trustee cannot promise it on a creditor’s behalf. Which creditors can apply for a wage arrestment in Scotland sets out who has the authority to act in the meantime.

No. Section 173(2) ends an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order on the date of protection, and nothing in Part 14 touches them before that date.

What section 173 does

Under section 173 the arrestment ceases automatically on the date of protection, with no application to any court, and executing a new one after that date is not competent for a debt claimable under the deed.

On a monthly wage that can mean two or three more deductions after you have signed. On a weekly wage it can be six to twelve.

Money already taken

Deductions made before the date of protection are credited against the debt rather than refunded. What happens to money already taken when a wage arrestment stops covers how to get that balance confirmed in writing.

What section 173 does not reach

There is no equivalent section for a bank arrestment anywhere in Part 14. What protects you instead is accession: every creditor either accedes or, under section 172(1)(a), has no higher right than one who did, and an acceding creditor cannot enforce.

What happens to a funds arrestment already executed before protection is not settled in Part 14, so ask your trustee to raise it with the creditor rather than assuming it falls away. Whether a trust deed stops a bank arrestment in Scotland takes that question on its own.

A statutory moratorium on diligence is the usual answer, and the Act expressly contemplates it being used for this. Section 195 lets you give AiB written notice of an intention to grant a trust deed for protection.

What the moratorium stops

The exceptions matter more than the rule. A statutory moratorium does not stop an earnings arrestment that was already running, because section 197(5)(d) of the Bankruptcy (Scotland) Act 2016 lets a creditor carry on executing one that came into effect before the moratorium began.

How long it lasts, and the one per year rule

The period is six months, running from the day the entry is registered, under section 198. Six weeks became six months by the Coronavirus (Recovery and Reform) (Scotland) Act 2022, with effect from 1 October 2022.

You may not give notice under section 195 if you gave one in the immediately preceding 12 months, so the timing is worth advice before you use it.

The moratorium ends early if a trust deed becomes protected, if sequestration is awarded, if a Debt Payment Programme is approved, or if you withdraw the notice. It can also run past six months for up to seven further weeks while a trust deed is still seeking protected status.

AiB enters your name on both the Register of Insolvencies and the DAS Register, so it is not a private step. How you apply for a statutory moratorium in Scotland and how a statutory moratorium protects you cover the mechanics.

The one people ask about that is not available

A mental health moratorium is provided for by the Bankruptcy and Diligence (Scotland) Act 2024, as a duty on Ministers to make regulations, and those regulations do not exist. Nothing about it is law yet, so ask the Accountant in Bankruptcy for the current position rather than relying on it.

It stays an ordinary trust deed. Creditors that refused to accede are not bound, and you are left with a trustee, a payment plan and no statutory shield.

The two ways it fails at this stage

Objections may reach the threshold in section 170(2), which is a majority in number of notified creditors or no fewer than one third in value. How many creditors have to agree to a trust deed explains why that is an objection test and not an approval test.

The second route is procedural. If the trustee misses the four week deadline in section 171 for applying to AiB, the deed is not protected, and only a sheriff can direct resubmission.

Where the delay was the trustee’s own act or omission, the costs of re-presenting cannot come out of the estate without the sheriff’s authority under section 189. That is a protection for the estate rather than for you, but it is worth knowing it exists.

Protection can also be removed afterwards

Since 1 July 2024, where a material error or irregularity is identified within three months of the date of protection, the trustee must notify AiB as soon as reasonably practicable. AiB then decides whether to remove protection.

Protection ceases 14 days after AiB’s notice unless a review application is made, and removal does not prevent the deed being protected again if the conditions are met afresh. What happens if your trust deed fails deals with a protected deed collapsing later, which is a different problem.

Two questions, and a trustee who has thought about the gap will answer both without hesitating. What is being done about any diligence already running, and on what date do you expect to present the deed to AiB.

Four more worth putting in writing

• Whether a statutory moratorium is being applied for, and what it will and will not cover in your case.
• How many more deductions your employer is likely to make before the date of protection.
• What happens to your contribution if your circumstances change before the deed is presented.
• Which creditors hold a third or more of the balance between them.

One thing that does not change during the gap

Interest is not claimable in the trust deed beyond the date of granting, because claims are valued as at that date. That is a rule about the claim rather than a prohibition on a creditor continuing to apply interest to the underlying account.

Ask your trustee how each account will be treated. How much a trust deed costs in Scotland covers what comes out of the payments you make in the meantime.