Steps to a Trust Deed: How It WorksDo I Qualify?
Step 1: See if you qualify
Fill in our Trust Deed Wizard® to see what options you may qualify for.
Step 2: Find out what your options are
Our Trust Deed wizard can speed up the advice process, this is an easy to use application.
Other options available to you will include:-
- Do nothing – pay off the debt yourself
- Debt Arrangement Scheme (DAS)
- Debt Consolidation Loan
Our advice is to not rush into anything.
Our FCA-regulated advisors are at hand to let you know about all the available options to help you become debt-free – however, only you can make the final decision on what will suit you the best.
If you want to proceed with a Trust Deed, or any other debt solution, we will work with you to calculate an amount that you can afford to pay every month, and we’ll guide you through the process
In addition, as well as being affordable for you, your monthly payment amount has to be acceptable to the creditors for them to proceed.
Step 3: Agree terms and sign your Trust Deed
Once you are happy to go ahead with a debt solution, we’ll start drafting your case. Once this is done, we’ll arrange a final signing meeting where your advisor will go over all the paperwork with you and answer any questions you may have to make sure you’re 100% satisfied with the terms. If you are, you’ll sign off on the Trust Deed and your first payment which will now be based on your affordability.
The payment (which is the same each month) replaces all other monthly debt payments to your creditors.
Step 4: Get your Trust Deed protected
After you sign your Trust Deed, the next step is to get it approved by your creditors to protect it. Our Trust Deed proposals currently have a 98% creditor acceptance rate. However, to ensure your expectations are managed from the start, your advisor will let you know what the chances are you will get accepted/rejected, based on their previous experience.
Once your paperwork is processed, this will be registered on the AiB (Accountant in Bankruptcy) website, where your creditors can access it. They usually have five weeks to accept or reject it – the decision will be relayed to you by the insolvency practitioner (your ‘trustee’), as creditors can’t directly contact anyone who has entered a Trust Deed.
This five-week period is known as the ‘protection period’. After it lapses, with no claim from your creditors, you’ll receive your protection letter from your trustee, making you aware that your trust deed has been fully approved and that you’re now in a protected trust deed agreement.
Getting your trust deed approved gives you legal protection from your creditors. As long as you stick to the terms of the trust deed, creditors can’t take further action to pursue the debt.
Step 5: New reduced monthly payments
Typically you make your first payment within the first four weeks before your Trust Deed becomes protected. This can be set up between you and your advisor for a time of the month that’s comfortable for you.
For example, if you’re paid a salary at the end of each month, your advisor could arrange your Trust Deed payments to be scheduled for just after then.
Step 6: Be debt-free in four years
After your Trust Deed term is finished, any remaining debt will be written off, leaving you free of debt.
It usually takes four years, but this can be extended to allow you to make additional payments, which you will have agreed to before entering the Trust Deed. This can sometimes occur to allow you to pay off your debt using equity, which involves paying a larger amount over a longer period of time. Again, this will have been agreed with you at the start of your Trust Deed term depending on your level of debt.
If your circumstances change during your trust deed ie. redundancy or change in your income, it is important that you let you trustee know of these changes, and they will work with you to help conclude your Trust Deed.
Trust Deed Scotland – why you can trust us
Trust Deed Scotland is an experienced Scottish debt advice company. We give free and impartial advice on trust deeds and have helped more than 25,000 people in Scotland enter into trust deed agreements, or alternative solutions.
We understand that being in debt and struggling with repayments can be stressful. Our non-judgemental advisors have spoken to many people throughout the years with differing reasons of how they found themselves in debt. While no two cases are identical, we’ve got more experience than anyone else and will give you the best possible advice.
This page explains all you need to know about how Trust Deeds work and how to apply for a Trust Deed.
Advantages of Trust Deeds
- Your debt payments will be more affordable because they’ll be based on your disposable income. Your monthly debt payment will usually be significantly lower than if you’re making multiple payments each month to different creditors.
- Interest on your existing debts will be frozen when your trust deed term starts.
- After you’ve finished making the payments agreed under your trust deed, the rest of your debt will be written off. Creditors can’t demand that you pay them the rest of what you owe, but you need to stick to the agreed schedule for debt payments.
- Unlike bankruptcy, if you own a home, it will be protected as long as you stay within the terms of your trust deed. However, you may have to agree to additional payments to protect your equity – your advisor will go over this with you before you enter your trust deed.
Disadvantages of Trust Deeds
- A Trust Deed will harm your credit rating and stay on your credit record for six years. Banks and other loan providers check this record when deciding whether to give you a credit card or loan.
- A reduction in your credit rating will make getting new credit harder and more expensive during and after the Trust Deed term.
- A Trust Deed may not be an option with certain job types.
To find out more about what a trust deed is, visit our Protected Trust Deeds page.
- If you’re struggling to pay debt, you should consider getting free advice from an FCA qualified advisor.
- A Trust Deed is a legal arrangement for Scottish residents and uses formal Scottish legislation.
- A Trust Deed can take away the stress of juggling multiple unsecured debts (e.g. loans and credit cards) by combining them into a single, low monthly payment.
- Trust Deeds usually last four years, after which any remaining debt is written off if that’s been agreed with your advisor from the start.
- Debt Help Scotland – includes alternatives such as DAS.
For more information on how to become debt free, call us on 0141 221 0999 or email firstname.lastname@example.org.