stars-five-icons

Navigation Toggle

Get help with your debts, call now for debt advice
0808 2085 198 Call our team

Let's get your finances sorted

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

What is a Trust Deed?

A protected Trust Deed is a legally binding solution for people who are struggling with unsecured debt. This type of personal debt solution is only available to people living in Scotland, so if you live in England or Wales, an Individual Voluntary Arrangement (IVA) or Debt Management Plan (DMP) might be the right solution for you.  A Trust Deed is an alternative to other forms of debt relief in Scotland, such as the Debt Arrangement Scheme (DAS) or Sequestration (Bankruptcy).

  • Trust Deeds are an agreement between you and a licensed Insolvency Practitioner (IP), for the benefit of your unsecured creditors
  • Payments are made, based on what you can afford, after living costs
  • Monthly instalments are usually made over four years, but this can be longer
  • At the end of the arrangement, the remainder of your debt is written off
  • During the Trust Deed, any interest or fees on your debts are frozen at the date of commencement
  • Once a Trust Deed comes into effect, creditors should no longer contact you
  • As long as you stick to the terms of your agreement, creditors can no longer take legal action against you for recovery of their debts
  • Trust Deeds must be prepared and administered by an IP
  • Once you have entered into a Trust Deed, the IP who set it up also becomes your Trustee and it is their job to manage the administration of your Trust Deed
  • Trust Deeds allow you to retain much greater control over any assets you might possess, including property and vehicles
Get Debt Help

The benefits of a Trust Deed

Get Debt Help

A Trust Deed and Your Assets

In a Trust Deed you can keep your home, although you may need to release some of the equity for creditors as part of the agreement.  If you are a home owner, the level of equity (difference between the value of the house and any loans secured on it) is calculated and fixed at the start of the Trust Deed.  The equity, if applicable, has to be realised for the benefit of the creditors but this is normally done without having to sell the home – it is extremely unusual to sell the home in a Trust Deed, unless you wish to do so.

Equity, if applicable, can be realised by the following methods:

 

In almost all cases you will be able to keep the car, especially if it is required for work purposes.  If the car is valued at less than £3,000 then it will not be considered as a realisable asset of the trust estate.  If the car is brand new and/or worth a significant amount then you may be asked to trade it in for a less expensive car, releasing either income or a lump sum to the Trust Deed.  If the car is subject to a Hire Purchase agreement or another type of secured finance agreement, you will be allowed the contractual repayment within the monthly expenditure (provided it is not excessive) and, in most cases, you will be able to keep the car.  Always confirm the type of car finance before proceeding, original agreements must be provided.

If you have savings before you start your Trust Deed, it is very likely that they will be paid to the Trust Deed. However, when calculating your affordable monthly payment, a ‘contingency’ allowance of up to £20 a month is often taken into account. There could also be an allowance for irregular expenses, such as MOTs, household repairs etc. Ultimately, however, if you are managing to save a significant sum, your trustee will increase the amount of your Trust Deed payments to enable a higher return to be paid to your creditors.

Your pension fund will not be counted as an asset when the terms of your IVA are being decided. However, if you are currently drawing from a pension, this will be counted as part of your monthly income. If you are currently employed, and paying into an employer pension scheme, you may have to reduce these payments to free up more income for Trust Deed payments. With a private pension, you might be asked to suspend payments altogether for the duration of your Trust Deed.  Before a Trust Deed and during a Trust Deed you should not release a ‘tax free lump sum’ from your pension without discussing this with your adviser and/or IP.

Get Debt Help

The Advantages of a Trust Deed

There are two other key debt solutions available in Scotland. Sequestration is the Scottish form of bankruptcy. It involves the sale of your assets in order to pay off your debts. Debt Arrangement Schemes, which result in Debt Payment Plans, organise your payments into an affordable monthly payment that you pay until all your debts are fully paid off. Below we have created a table which compares these three options.

 

Get Debt Help

Get Trust Deed help

A Trust Deed could have you well on your way to becoming debt free. To talk to an advisor call 0808 2085 198.

Managing a Trust Deed

Changing Circumstances

Additional Debts

Missed Payments

Cancelling a Trust Deed

If the Worst Should Happen

If you need help managing your Trust Deed with us, please don’t hesitate to call our existing customer line at 0800 0431 431.

 

Get Debt Help
[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

[contact-form-7 id="3513" title="Popup Form"]

By submitting this form you agree to our Terms & Conditions and Privacy Policy.

https://www.creditfix.co.uk/debt-solutions/trust-deed