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.
Am I eligible for a Trust Deed?
Note: For those living outside Scotland, other options like an Individual Voluntary Arrangement (IVA) may be available.
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.
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
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.
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?
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.
- 100,000+ including 1,299 from Scotland, received free, confidential debt advice last year
- 76% Average client debt written off through IVAs in 2024
Frequently asked questions
We’ve put together a list of frequently asked questions about DMPs and we hope your query can be answered here.
Can I get a Trust Deed twice?
Applying for a second Trust Deed is possible if you‘ve been discharged from the first one. There are no time limits for applying for another Trust Deed, but creditors will still need to approve it like your first arrangement.
Will a Trust Deed affect my mortgage?
If you own a home, you may need to release some equity to contribute towards your Trust Deed. Keeping up with mortgage payments is essential since your mortgage is a secured debt. If you’re planning to get a mortgage while in a Trust Deed, it may impact your ability to borrow.
What happens if I can’t get my Trust Deed protected?
Sometimes, creditors object to the Trust Deed if they feel they could get more of their money back another way. If your Trust Deed doesn’t get protected, your Trustee will look at other options for you. In the event that your creditors object to what’s in your proposal, our team will discuss other debt solutions to help manage your debts.
Let’s make your debt more affordable
You’re just two steps away from taking back control of your finances and freeing up more money for you and your family.
Getting advice has no impact on your credit score.
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly
Excellent, professional, friendly and empathetic service. PayPlan have given us our lives back!
Sandra Daly