Protected Trust Deeds
Every year over 6,000 Scottish residents use Trust Deeds to become debt free in as little as 48 months
A protected trust deed is a voluntary and legally-binding agreement between you and your creditors overseen by a trustee, that can help you get out of debt that you are struggling to repay.
A trust deed can pay off most unsecured debt such as credit cards, personal loans, council tax, store cards, shortfalls…etc. This can all be done within a realistic timeframe, typically 4 years. A trust deed can only be arranged and administered by a licensed insolvency practitioner (trustee).
A trust deed is available to people who’ve been living in Scotland for more than six months and who have debt of £5,000 or more. There are many factors that can influence your eligibility for a trust deed, including:
You can qualify as a homeowner (depending on your equity, don’t worry we will check this as part of the trust deed process), a private tenant, a council tenant, or someone who lives with their parents. If you own your home, your Trust Deed Scotland advisor will explain to you how you can protect it.
Find out if you’re eligible for a trust deed with our Trust Deed Debt Calculator.
Contrary to popular belief, most people who enter into trust deeds have not missed any payments this could be because they are using debt to service debt. Typically people know in the back of their head that debt is an issue, and this can cause stress and anxiety having an impact on their quality of life, a trust deed can include debts as listed below:-
Unsecured Bank Loans
Council Tax Arrears
Previous Mortgage (shortfall)
Previous Car HP (shortfall)
HMRC Bills (self employed)
Some people often try to get consolidation loans without getting advice which could make the situation worse as they may not know that there are other options available to Scottish residents to help deal with debt. Not everyone qualifies for a trust deed, or it may not be the best option.
If you live in Scotland, other options for paying debt include sequestration (the Scottish version of bankruptcy).
Another option is a debt arrangement scheme (DAS), a government-endorsed initiative that lets you pay off your debt over an extended period of time. Your debts get frozen and you make payments at a rate you can afford – however, this involves paying back the full debt amount owed.
If you live in England, Wales or Northern Ireland, you can use an individual voluntary arrangement (IVA), which is similar to a trust deed agreement.
Start by simply filling out our TRUST DEED WIZARD®
The Trust Deed Wizard is secure, confidential and easy to use, this can be used from your smart phone, tablet or PC and will guide you through the process.
If you are happy to proceed, we can start drafting a proposal for your trust deed, your advisor will work with you to finalise the paperwork, and answer any final questions.
They will also help you set up your first trust deed payment, after which you can stop all separate debt payments to your creditors. These new monthly payments will be based on what you can afford and will be taken out every month at a convenient time for you. You can make the first payment as soon as you’re ready.
Protected means that five weeks after your trust deed is registered, if no creditors object that have over 33% of your total debt, then your trust deed will the need to be approved with the AIB.
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.
A protected trust deed also protects you from bankruptcy, although your trustee or creditors can still petition for it if you break the terms of the trust deed.
If creditors don’t agree to your trust deed, it’s not ‘protected’ and therefore not legally binding.
We’re a non-profit company giving free debt advice on trust deeds and other financial arrangements to Scottish residents and are responsible for handling trust deed arrangements.
We’ve helped over 15,000 people in Scotland get their finances in shape, and have a 9.9/10 rating on Trustpilot.
We explain financial matters in plain English and will never sell your details for marketing purposes. Our service is confidential and there’s no obligation to agree to anything after talking to us.
The most important thing to remember is that tell your trustee of any financial changes that will prevent you to stick to the trust deed payment agreed with your creditors . Your trustee will work with you help complete your trust deed if your circumstances have changed while the trust deed is running.
£5,000. You also need to have a regular income or for someone to guarantee to pay some or all your debt.
A secured debt is usually for a larger loans such as a car loan (hire purchase) or a mortgage. The company lending you the money will use your asset as security if you can’t repay your loan, that means your lender has the right to repossess your home or car.
An unsecured loan is when you borrow money from a lender and agree to make regular payments until it’s paid and because the loan isn’t secured on any assets, the interest rates tend to be higher.
Student loans can’t be included in a trust deed but all other unsecured debts can be considered.
No setup fees are involved in setting up a trust deed. All administration fees are included in your monthly payments:
These are charged against the money you owe creditors, so will be agreed between you and your creditors at the start.
It’s based on your disposable income, which is calculated by deducting your living costs (mortgage/rent, bills, child car, transport costs, food, etc.) from your income.
Most people find after entering a trust deed that their monthly debt payment is hundreds of pounds less than when they were making separate payments to their creditors.
Typically four years – you make 48 monthly payments (the same amount each month) to your trustee who distributes the money to your creditors, minus their fee for arranging and managing the trust deed.
However, in some circumstances it could take longer, this will all be discussed with you.
The rest of your debt will usually be written off, leaving you debt free, unless you’ve agreed otherwise with your trustee beforehand.
Much will depend on your income and whether you can convince a mortgage lender that you’re a responsible borrower. We recommend that you talk to a financial advisor for more information about this
Your credit rating will probably be affected, but remember it will already have been damaged if you’ve missed any payments to your creditors. Once your trust deed agreement has ended, you can start rebuilding your credit rating.
The trust deed will be on your credit record for six years after you start it. The average trust deed lasts four years, so it’ll still be on your credit record two years after you’ve finished it.
Your assets will be safe if you stick to the trust deed’s terms.
If you’re a homeowner and your home is worth more than the amount owed on your mortgage loan, you may have to release some of its value.
The gap between the value of your home and mortgage is called equity. Your advisor will discuss this with you, and if necessary, any equity arrangements will be organised before entering a trust deed.
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