Trust Deed

A Trust Deed is a type of insolvency specifically for Scottish Residents.

It is a legally binding agreement between yourself and your lenders.

It gives you legal protection from your unsecured lenders and could allow you to write off up to 90% of your unsecured debt, usually within 48 months.

Most people are able to keep their homes.

Evidence of entering into an Individual Voluntary Arrangement, a Debt Relief Order or a Protected Trust Deed will be entered on a public register.

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Benefits

  • You could write off up to 90% of your unsecured debt*
  • Set release date usually after 48 months
  • Be considered even if you are receiving benefits

Key info & fees

Further information on fees and debt solutions

* We must put certain 'priority' debts before others, debt write off applies to unsecured debts, within and only on completion of a Protected Trust Deed.


See if you qualify for help today

£2,000 or under£30,000 +














Trust Deed Example

Here's how a Protected Trust Deed can help make debt affordable

Current unsecured debts

Monthly repayment:

£366

Total owed:

£13,122

Within a Trust Deed

New monthly repayment:

£122

Total to be paid:

£5,856

Piggy Bank

 

Monthly payment reduced by 66%. Debt write off applies to unsecured debts, within and only on completion of a Trust Deed.

 

What is a Protected Trust Deed?

A Trust Deed is legally binding

Unlike an informal debt management plan, a Trust Deed is a legally binding but voluntary agreement between yourself and your lenders which is arranged by a licensed Insolvency Practitioner.

It is designed to help people manage their debt problems and can be a good way for them to get their finances back on track. Within a Trust Deed, you have a set date when you know your unsecured debts will be cleared, giving you peace of mind.

Don't ignore mounting debts....

You should not ignore mounting debts you cannot control, particularly if your outgoings are predominantly debt repayments. You should look for some help at this time.

  • A Trust Deed can help by allowing you to reduce your monthly payments to your lenders to an affordable amount, making it easier and less stressful for you.
  • You will have no further contact with your lenders and unlike some debt plans, it does not put you at risk of losing your home or car and protects your assets. 
  • It also protects you from your lenders adding any further interest or charges on to your debt, preventing more debt from mounting up.

Trust Deed Case Study

The situation

Mr. Arnold, a married lorry driver from Fife, contacted Debt Advisory Line with a debt level of £24,000. This was after his employer reduced his basic hours which also meant all overtime being lost, this resulted in him losing £300 a month in wages.

His partner had run up most of the debt, but in his name. As Mr. Arnold could no longer meet the payments, he needed to seek professional advice before the situation got worse.

After speaking with a Debt Advisory Line advisor

He spoke to Debt Advisory Line, and it was agreed with our debt advisor that he qualified for a 4 year Trust Deed, which would be the quickest way of reducing his debts, while protecting his assets. A payment of £227 a month was all Mr Arnold could reasonably afford and this saved him £292 a month.

The outcome

This payment of £227 a month was a 56% saving on his previous monthly repayment. We are still here for Mr. Arnold, we'll carry out regular reviews of his circumstances so if things change again and he is struggling to afford the repayments, his monthly payments could be changed too (as long as the lenders agree).

In detail

Creditor

Debt

Amount being paid each month*

Loan 1

£7,851

£131

Loan 2

£1,044

£58

Overdraft

£2,749

£0

Credit Card 1

£2,778

£30

Credit Card 2

£6,253

£200

Credit Card 3

£3,557

£100

Total

£24,232

£519

New payment through Trust Deed:     £227
Total to be repaid:             £10,896 (48 payments of £227)

*In this case some debt payments were not being paid at all at the time we were contacted. Based on an existing customer, name altered for identity protection. Debt write off applies to unsecured debts, within and only on completion of a Trust Deed

 

How a Trust Deed Works?

Once the Trust Deed has been agreed by a licensed Insolvency practitioner;

  • They will then speak to your lenders on your behalf and you will have no further contact from them. 
  • The lenders should freeze interest and charges on your debt for the duration of the 4 years, stopping any more debt mounting up.
  • Once the 4 years is up and you have completed all payments, the remainder of your debt should be written off, allowing you to make a fresh start with your finances.

If you think you may qualify for a Trust Deed, one of our friendly advisors will be able to answer any questions you may have, and assess your qualification.

 

Advantages of a Trust Deed

  • You can write off up to 90% of your unsecured debt *.
  • Set release date when your debts could be cleared, usually within 48 months.
  • A Protected Trust Deed: Gives you legal protection from your lenders and once you have qualified they cannot take legal action against you.
  • All interest and charges frozen on the debt.
  • Allows you to make monthly payments that you can realistically afford.
  • Less formal and less restrictive than being made bankrupt (sequestration)
  • Does not put you at risk of losing your home.
  • No court involvement and does not appear in the local paper.
  • All assets are protected.
  • No harassment from lenders, all correspondence is handled by the trustee.
  • Unlike some other providers of Trust Deeds, with us you can be considered for a Trust Deed even if you are receiving benefits.


Disadvantages of a Trust Deed

  • Will affect your credit rating making it more difficult to get credit whilst you are in the Trust Deed. This will last 6 Years in total, 4 whilst you are in the Trust Deed and 2 afterwards.
  • You must declare all your assets
  • Whilst you can keep your home, any equity you have will be taken into consideration
  • You must stick to the payments for the duration of the Trust Deed. If you don't your lenders could take legal action against you and petition for your sequestration/bankruptcy.

 

Maintaining your Trust Deed

A Trust Deed allows you to make a single affordable monthly payment. However, you must abide by all the requirements of the trustee (usually an insolvency practitioner) that is administering your Trust Deed. Only then will you be discharged of your unsecured debt (typically after 4 years).

  • Your finances will be reviewed on a yearly basis and payments can be adjusted if necessary.
  • If you fail to make the payments, you will lose protection from your lenders and they may decide to take legal action against you.


If you are having difficulties meeting the payments, speak to your insolvency practitioner, don't just ignore the payments.

* We must put certain 'priority' debts before others. Debt write off applies to unsecured debts, within and only on completion of the Protected Trust Deed. 

Trust Deed FAQ's

The Insolvency Service guide to dealing with your creditors

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