Understanding the objection process - and why most Trust Deeds still succeed even when creditors push back.
Once your Insolvency Practitioner has prepared your Trust Deed proposal, it is sent to all your known creditors and advertised in the Edinburgh Gazette. From this point, creditors have 5 weeks (35 days) to respond.
During this period, creditors can:
For a Trust Deed to be blocked, creditors representing more than one-third of the total debt value must formally object within the 5-week window. This is a significant hurdle.
In practice, the majority of Protected Trust Deeds are granted protected status. Creditors who do not respond are treated as having accepted the proposal.
Why do most creditors accept? Creditors typically receive more through a Trust Deed than they would through bankruptcy. They also avoid the cost and uncertainty of court action. For most creditors, accepting a structured repayment plan makes financial sense.
If creditors representing over one-third of debt by value object, the Trust Deed cannot become protected. At this point, your options include:
Once your Trust Deed achieves protected status, every creditor included in it - including those who objected - is legally bound by it. They cannot add further interest, take court action, instruct debt collectors, or apply for wage arrestment against you for those debts.
If a creditor is not notified (for example, because you forgot to include them), they are not bound by the Trust Deed and can still pursue you for the debt. It is essential to provide your Insolvency Practitioner with a complete, accurate list of all your creditors at the outset.