Trust Deed

What is a Trust Deed?

A Trust Deed is a debt solution available to people living in Scotland who are struggling with debt.

A Trust Deed lets you make affordable monthly payments for normally four to five years. At the end of the term, any remaining unsecured debts are written off, so you’re no longer required to repay them.

How does a Trust Deed work?

A Trust Deed is a formal agreement that helps people in Scotland manage their debts in an affordable and structured way. It allows you to make monthly payments based on what you can afford for typically four to five years. Once the Trust Deed is completed, any remaining unsecured debts included in the Trust Deed will be written off, and you’ll no longer be liable for them.

Assessing your budget and debts

• We’ll review your income, expenses, and total debts to determine how much you can realistically pay each month.

Finding the right solution

• If a Trust Deed is your best option, we’ll help you set up an affordable monthly payment plan based on your budget.

Proposal to creditors

• We’ll prepare and submit your Trust Deed payment plan to your creditors for approval.
• If agreed, we’ll manage the distribution of your monthly payments to your creditors based on the terms of your Trust Deed.

Monthly payments

• Once your Trust Deed is approved, you’ll make the agreed monthly payments.
• At the end of the term, any remaining unsecured debts included in the Trust Deed will be written off.

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Am I eligible for a Trust Deed?

A Trust Deed could be the right solution for you if:

• You have a steady income: This could include wages or pension payments.
• You owe money to several creditors: If you’re managing multiple debts, a Trust Deed allows you to make one affordable monthly payment instead.
• You can commit to a manageable monthly payment: Your payment will be based on what you can afford, ensuring your essential expenses are covered.

Note: For those living outside Scotland, other options like an Individual Voluntary Arrangement (IVA) may be available.

Am I legally protected in a Trust Deed?

There are two types of Trust Deeds. A Protected Trust Deed provides you legal protection, while an Unprotected Trust Deed doesn’t.

A Trust Deed becomes legally binding as long as fewer than half of your creditors (by number) or a third of your creditors (by the total amount of debt) reject the proposal.

Creditors can no longer chase you for payments or take legal action during the Trust Deed or after it’s successfully completed.

What are the pros and cons of a Trust Deed?

Benefits of a Trust Deed

• Affordable Monthly Payments: Your payments are based on what you can realistically afford, ensuring your essential living costs are covered.
• Asset Protection: Most people can keep their homes, provided payments are maintained, though releasing equity may sometimes be required.
• Clear Timeframe: A Trust Deed typically lasts four to five years, giving you a clear end date for becoming free of the debts.

Things to Consider

• Your credit score will be affected for six years from signing your Trust Deed paperwork, and your Trust Deed will be listed on the public Insolvency Register during this time.
• If you own a home, you may be asked to release equity through remortgaging. Valuable assets might also need to be sold to contribute to your debts, but you will be made aware of this before all parties have signed off your Trust Deed.
• Missing payments could lead to your Trust Deed failing, allowing creditors to resume legal action or pursue other recovery methods.

We’re here to guide you through your options and help you find the best solution for your circumstances.

What debts can be included in a Trust Deed?

A Trust Deed covers most unsecured debts, such as:

• Bank loans
• Overdrafts
• Credit cards
• Payday loans
• Council tax arrears
• Child maintenance arrears

Your Trust Deed won’t cover certain types of debt, including secured debts (like mortgages), court fines, and student loans. However, we’ll ensure that any debts not included in the Trust Deed are accounted for in your budget so you can continue making payments as usual.

Click here [Link] for a full list of debts that can and can’t be included in a Trust Deed.

How long does a Trust Deed last?

• Standard Trust Deed: Typically lasts four years, during which you’ll make affordable monthly payments.
• Extension to five years or more: It may be extended to five years or more if you have equity in your property, or your creditors require a greater amount to be repaid into your Trust Deed.

Why Choose Us?

• Over 100,000 people, including 1,299 from Scotland[1], received free[2], confidential debt advice last year
• 76% average debt written off in 2024[3]

Our dedicated team is here to support you every step of the way, providing expert guidance to help you choose the debt solution that works best for your circumstances.

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FAQs

We’ve put together a list of frequently asked questions about Trust Deeds to help answer any questions you might have.

[1] By PayPlan from Jan 2024 – Dec 2024

[2] Certain debt solutions that could be an option for you may incur a fee, such as a Trust Deed

[3] By PayPlan Scotland from Jan 2024 – Dec 2024