Three things decide it: what you earn above your reasonable expenditure, what you own, and whether your creditors would let a trust deed happen. Change any one and the answer can flip.

What follows is the comparison in four tables, which is four more than any page currently ranking for this question. What actually differs between them is the companion piece.

Sequestration, on the numbers. Section 164(3) requires at least £5,000 of debt for a trust deed, against £3,000 for a full administration debtor application under section 2(8)(a).

A trust deed needs more debt than a bankruptcy

There is a statutory minimum. Section 164(3) of the Bankruptcy (Scotland) Act 2016 requires your total debts, including interest, to be not less than £5,000 at the date you grant the deed.

That catches people out, because a trust deed is usually presented as the softer option. How much debt you need sets out every threshold with its date.

The creditor veto only exists on one side

Nothing has to be agreed. Section 170(2) deems creditors to have acceded unless the trustee receives written objections, within the relevant period, from a majority in number or from no fewer than one third in value of them.

That is the opposite of how it is usually described. The test is whether enough creditors object, not whether enough approve, and a creditor who never replies is counted as having accepted.

The relevant period is five weeks from registration of the notice, under section 193, and how many creditors have to agree works through the arithmetic.

Nothing equivalent applies to a debtor application. Nobody can object to section 170(2) terms on the sequestration side, because the conditions are statutory and the Accountant in Bankruptcy applies them.

Getting in, side by side

This is the biggest structural difference. Sequestration has a three-year clock on the family home under section 112(2), and a trust deed has no clock at all.

The home

In a sequestration your interest in the family home is reinvested in you at the end of three years from the date of sequestration, unless the trustee has taken one of nine listed steps.

Section 112 sits outside the trust deed part of the Act, so a trust deed trustee’s interest is not time limited. Protection there is negotiated instead.

Whether you lose your home in a trust deed and whether you lose it in a sequestration deal with each in full.

The car, and the figure that is wrong nearly everywhere

The figure is £1,000, not the £3,000 most pages print. A trust deed conveys the estate except what would be excluded on sequestration, which routes through section 88(1)(a) of the 2016 Act to section 11(1)(b) of the Debt Arrangement and Attachment (Scotland) Act 2002: a vehicle reasonably required by the debtor and not exceeding £1,000 in value.

The £3,000 belongs to a different test. Section 2(3)(b) of the 2016 Act opens with the words for the purposes of subsection (2)(c) and (d), which is Minimal Asset Process eligibility, and it has been generalised into advice about trust deeds where it does not apply.

The £3,000 is still real in the sense that the Accountant in Bankruptcy uses it and trustees follow it. A car worth under £1,000 is outside the deed as a matter of law, and a car between £1,000 and £3,000 is very likely to be left with you as a matter of practice.

So the £3,000 you have read about is a Minimal Asset Process eligibility rule under section 2(3)(b), not a trust deed protection, and whether you lose your car in a trust deed goes through it.

Assets compared

Section 11(1)(b) of the Debt Arrangement and Attachment (Scotland) Act 2002 is where the £1,000 vehicle figure comes from.

A trust deed has no application fee for you and sequestration has one of £150, removed entirely for the Minimal Asset Process on 6 February 2023.

The fee is the small part

The application fee is £150, and it is not payable if you receive certain prescribed benefits or the common financial tool shows you have no surplus income.

Minimal Asset Process bankruptcy carries no application fee at all. The £150 belongs to full administration.

Two pages ranking for this comparison print £200 for sequestration. That figure stopped being right on 29 March 2021.

National Debtline’s Scottish bankruptcy guide is the charity page that states the current figure and the exemptions together.

What the trustee takes

In a trust deed, section 183(1) is exhaustive, and the word it turns on is only.

Section 183(1) is an exhaustive list, and the word it turns on is only. A trustee may be remunerated only by a fixed fee, a percentage of the estate realised, and outlays.

There is no statutory tariff for that fixed fee. The trustee sets it and sends it to creditors during the five-week window, and only an increase needs their approval or the Accountant in Bankruptcy’s.

You can have the fees audited. Schedule 4 paragraph 1 lets the debtor personally ask the Accountant in Bankruptcy to audit the trustee’s accounts and fix the remuneration.

In a sequestration the outlays and remuneration come out of the estate and any contribution instead. What a sequestration costs and what a trust deed costs price both.

Both run on a 48-month payment period, and the discharge dates are what differ. Sequestration can discharge you at twelve months while payments continue.

Time and money together

Discharge in a sequestration is a decision rather than a date. Section 137(2) is a power exercisable at any time after twelve months, and how long sequestration lasts sets out each clock.

Neither discharge is automatic in the ordinary case

A trust deed discharge depends on the trustee being satisfied that you met your obligations. A full administration discharge depends on a decision by the Accountant in Bankruptcy.

The exception is the Minimal Asset Process, where discharge happens six months after the award with nothing to apply for. That is the only automatic discharge in the system.

Both are insolvency and both are treated as insolvency data. The sharper difference is that only sequestration carries a restrictions regime.

The record compared

The credit reference agencies publish their own retention for insolvency data, and no statute sets it. How sequestration affects your credit file gives the three schedules.

There is no such thing as a bankruptcy restrictions undertaking in Scotland. The 2016 Act provides for orders and interim orders only, and undertakings belong to the law of England and Wales.

What neither of them will tell you in advance

No percentage can honestly be promised at the outset. What is written off is whatever is left unpaid when you are discharged, which depends on what you can afford over the term and what your estate realises.

Across every protected trust deed in Scotland in 2025-26, including those that paid nothing at all, creditors received a mean of 18.1 pence for every pound they were owed, up from 16.3 pence the year before. That is an average across thousands of cases and not a forecast of yours.

That is the published outcome for protected trust deeds rather than a promise about your case, and no provider can give you a percentage before the work is done.

The Accountant in Bankruptcy publishes no equivalent dividend figure for sequestration, so no comparison can honestly be drawn between the two on this measure.

Both end one, at different moments. A trust deed does it on the date of protection under section 173, and sequestration does it on the date of sequestration under section 72(2) of the Debtors (Scotland) Act 1987.

The gap is the difference

Protection runs from the date of registration, under section 163(2), not from the date you sign. The weeks in between are the exposed period.

So a trust deed leaves an exposed period between signing and protection, which is why a statutory moratorium is usually run alongside it.

It does not stop an earnings arrestment that was already running. Section 197(5)(d) of the Bankruptcy (Scotland) Act 2016 lets a creditor carry on executing an earnings arrestment, a current maintenance arrestment or a conjoined arrestment order that came into effect before the moratorium began.

That cuts both ways. Whichever route you take, a deduction already running keeps running until the date protection or the award arrives.

From your own figures rather than from the label. Surplus income, assets and the shape of your creditor list decide it.

Points that tend to favour a trust deed

• A reliable surplus that can sustain 48 months of contributions.
• Equity in a home you want to try to keep, where an agreement may be possible.
• A wish to avoid the restrictions regime that sits behind sequestration.
• A creditor list without one dominant creditor able to block protection.

Points that tend to favour sequestration

• Income solely from social security benefits and tax credits, so no contribution is due.
• Debts of £25,000 or less with assets of £2,000 or less, which may put the free Minimal Asset Process in reach.
• One large creditor likely to object and block a trust deed.
• No realistic prospect of paying creditors in full over any period.

Take both to an adviser who offers both

A certificate for sequestration is granted by a money adviser rather than a court, and what that certificate is explains the route it opens.

Where a Minimal Asset Process is in play the comparison changes again, and a trust deed against a Minimal Asset Process is the article for it.

If you can repay in a reasonable time, neither may be right. Bankruptcy against the Debt Arrangement Scheme and our trust deed page both set out the alternatives.