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Considering a trust deed?

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i There are no up-front fees, and we won’t charge you for debt advice. Once your trust deed is set up, there will be fees set by your insolvency practitioner. Available in Scotland only.

Trust deed

Trust deed. What is it?

A trust deed is a formal agreement between you and your creditors where you make reduced payments to your debts.

StepChange Scotland is an organisation that’s trusted and authorised to help arrange trust deeds. We don't charge you for advice, but there are payments to the trustee or insolvency practitioner once your trust deed is in progress.

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A trust deed usually lasts for four years. Once it’s completed, your unsecured debts will normally be written off.

Trust deeds are not available if you live in England, Wales or Northern Ireland. In these countries, an individual voluntary arrangement (IVA) is a similar solution, but it’s important to note that it has different benefits, risks and fees associated with it.

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What is a trust deed?

A trust deed is a voluntary agreement with your creditors to repay part of what you owe them.

A trust deed transfers your rights to the things you own to a trustee who may sell them to pay your creditors part of what is owed to them. A trust deed will normally include a contribution out of your income, usually for four years.

Your trustee must be a qualified insolvency practitioner (IP). Insolvency practitioners are regulated by law and must be members of an approved governing body.

An ordinary trust deed is not binding on creditors unless they agree to its terms.

Your creditors will need to agree to the trust deed before it becomes protected.

What is a protected trust deed?

A trust deed becomes a protected trust deed once your creditors have agreed to the proposal. At least half of your creditors need to accept the proposal for it to go ahead, or creditors representing at least two thirds of your total debt. If a creditor doesn’t respond, it’s assumed that they’ve accepted the offer.

Once the trust deed is protected, your creditors they can no longer take action to collect the debt including chasing you for payments or starting court action.

Instead of making payments directly to your creditors you’ll make a payment to your trustee managing the protected trust deed and they’ll distribute this to your creditors on your behalf.

Is a trust deed right for you?

mum at the table with bills

Considering a trust deed?

We're here to help. Free, online debt advice available now.

Get debt help

How much does a trust deed cost?

If you enter into a trust deed you’ll need to pay a fee to the insolvency practitioner (IP) managing it for you. The fees charged for trust deeds can vary, so it’s worth comparing the rates of a few companies.

The fee will usually be included in your monthly payment and covers the cost of the administration and running the trust deed. However it’s important to note that some IPs may charge an upfront fee.

How will a trust deed affect me?

If a trust deed is the right debt solution for your situation it’s important to know that there are certain benefits and risks associated with it. Things you’ll need to consider include:

  • A trust deed will appear on your credit file for six years from the date it begins. This may make it difficult for you to take out further credit
  • If the trust deed fails, there’s a risk of bankruptcy
  • A trust deed may affect your job so you should talk with your HR department, or check your contract, to see if it’ll impact you
  • Your details will be added to the Register of Insolvencies (ROI) for five years. This is a public register that contains details about all the current protected trust deeds
  • You’ll need to stick carefully to a budget during the four years your trust deed is running
  • You’ll have to pay a fee for the services of the IP administering the trust deed
  • You may have to sell valuable assets

Considering a trust deed?

Trust deeds are a specialised area of Scottish debt advice. If you haven't already received advice from us, make sure it’s the best solution for you by using our online debt advice tool. We’ll provide you with a tailored budget and the best solution to help you deal with your debts.