Getting a trust deed. How to apply

Can I get a trust deed?

To be able to apply for a trust deed, you’ll need:

• to have unsecured debts of at least £5,000, and
• be able to make regular payments over a fixed period

It’s important to get free and impartial debt advice before going ahead with any solution, so you can be sure you’re clear about the best options for your situation.

Trustees for trust deeds

You’ll need a specialist to manage your trust deed, called a ‘trustee’. You may also have heard them being referred to as ‘insolvency practitioners’.

Your trustee will look at how much you can afford to pay and whether your assets (items of value) will be sold.

You’ll normally have to sell any asset worth more than £1,000, but you may be able to exclude a property if there’s not enough equity (usually less than £20,000) in it. In some cases, you may be asked to release equity on your home or extend your trust deed by a year.

Your trustee will contact all of your creditors to explain how much you can pay, and if your creditors agree, your trust deed will become a protected trust deed (PTD).

Your trustee will complete your trust deed application for you

• Most of the work is done for you, though your trustee will need some information from you before they begin the application process.
• When you've signed and returned the completed application to the trustee, they’ll send it to your creditors. It’ll be accepted unless more than half of your creditors object to it.
• The trustee takes their fees and costs from your payments and from the sale of your assets.

Frequently asked questions about getting a trust deed

These are some of the questions our clients commonly ask us about trust deeds.

Can you get a trust deed twice?

It is possible to get another trust deed, even if you’ve had one before, but you must have been discharged from the previous trust deed before you enter into a new one.

Can a trust deed be revoked?

You cannot cancel a trust deed once you’ve entered into it, but there is some flexibility if you’re having difficulty keeping up with payments.

The trustee may agree to

• a payment break, on a temporary basis
• extending the term of your trust deed
• lowering payments, if the term has been extended

If you still find you can’t make the payments to your trust deed, the trust deed can be terminated. This will mean you’re no longer protected from action by your creditors to reclaim what you owe them.

In certain circumstances, your trustee could apply to make you bankrupt, if they believe this would be in the best interests of your creditors.

Can an accountant prepare a trust deed?

An accountant can prepare a trust deed for you, but only if they’re qualified (as a trustee). You will need to check this with your accountant.

What restrictions will I be under if I’m on a trust deed?

There are certain restrictions you’ll have to abide by while you’re on a trust deed. You must:

• Tell the lender about your trust deed if you apply to borrow more than £2,000, either in your own name or jointly with someone else
• Make sure you co-operate with your trustee. You can’t refuse to do so
• Let your trustee know if your situation changes

Is a trust deed right for you?

For expert help use our free online debt advice tool to see whether a trust deed is the best solution for you.