Trust Deed / Protected Trust Deed
A Trust Deed is an agreement with your creditors to repay part of what you owe. Typically lasting four years, a Trust Deed allows you to make affordable monthly payments. If you adhere to the terms and make all required payments, any remaining debt is written off at the end of the term.
Benefits
- Interest and charges are frozen once your Trust Deed becomes protected.
- Your home may not be at risk if the arrangement doesn’t require it.
- One affordable monthly payment simplifies your finances.
- Creditors cannot take further action against you once the Trust Deed is protected.
Considerations
- Assets may need to be transferred to the trustee, who could sell them to repay creditors.
- Your credit file will be affected.
- If not protected, only creditors who agree to the Trust Deed are bound by its terms.
- Failure to cooperate with the trustee may lead to bankruptcy.
Examples of debts that can be included*
Credit & Store Cards
Personal loans
Catalogues
Overdrafts
Buy Now, Pay Later
Payday loans
Examples of debts that may be included*
Utility bill Arrears (gas, electric, water)
HMRC debts (self-assessment)
Benefit overpayments (DWP or local authority)
Council Tax Arrears
Rent arrears
Debts to friends or family
Examples of debts that cannot be included*
Child maintenance arrears
Student loans
Secured loan arrears
Court fines
Mortgage arrears
Car financing arrears (including PCP & HP)
Faqs
A Trust Deed is a voluntary but legally binding agreement between you and your creditors. You agree to make affordable monthly payments over typically 4 years. At the end, any remaining included debts are written off.
Trust Deeds suit people who:
· Live in Scotland
· Have unsecured debts over £5,000
· Can afford regular monthly payments but can’t repay debts in full.
Your Insolvency Practitioner becomes your trustee and manages communication with creditors. You make one monthly payment, which is distributed to your creditors. Once the Trust Deed becomes “protected,” creditors can no longer take legal action against you.
Most unsecured debts, including:
· Credit cards and loans
· Overdrafts
· Council tax arrears
· Payday loans
· Secured debts like mortgages are not included.
A Trust Deed must be set up and managed by a licensed Insolvency Practitioner. They’ll assess your situation and help propose a plan to your creditors.
Yes. If your income increases or you receive a lump sum (e.g., inheritance), you may be able to settle your Trust Deed earlier.
Yes, a Trust Deed will appear on your credit file for six years from the date it begins. This can make it harder to obtain credit during and shortly after the arrangement.
It may. If you own a home, you may be asked to release equity to help repay your debts. Cars worth over £3,000 might also be considered an asset, but you may be able to keep them if they’re essential for work or family.
How can Debt Free Associates Limited help?
Our knowledgeable team can assess the best option for you and connect you with trusted partners who can administer the arrangement.
Contact us today or use our live chat for immediate assistance.