A debt relief solution that can be carried out in Scotland. It is a legally binding agreement that usually lasts four years between the debtor and all creditors. It can be prepared only by a licensed trustee, the so-called Insolvency Practitioner (IP) acting as a Trustee. The solution is possible with total debt exceeding £ 5000. The agreement consists in the fact that the trustee will set a monthly amount that you could reasonably pay your creditors after deducting all bills and expenses. The amount of the canceled debt depends on your personal circumstances. All interest and additional fees are retained. You also do not have to sell your home or car and your creditors can not continue to collect debt to you. After joining the Trust Deed, you must regularly pay back to the trustee the designated amount. After accepting the Trust Deed, the trustee collects his / her margin for running the case, which is always included in the monthly instalment. It is important to be aware that if you deliberately break the Trust Deed, the trustee’s margin will not be refunded.

The Advantages of Trust Deed

  • Trust Deed allows you to repay as much of your unsecured debt as you can over a typical 48 month period, which could mean a portion of the debt is written off.
  • Interest and charges are stopped on any debts included in the arrangement.
  • Your creditors are legally prohibited from taking any further enforcement action such as petitioning for your Bankruptcy.

The Disadvantages of Trust Deed

  • You must keep up payments for four years or risk Bankruptcy (any fees you’ve paid up to that point will not be recoverable).
  • The assigned IP will take a charge for their service, taken from the monthly payments. Therefore, it is wise for the individual to shop around and find the best option.
  • Trust Deed affects the credit rating for six years from the moment of signing the agreement, which may result, for example, in its downgrade to 0 ‘or refusal of the loan application
  • Trust Deed may affect an individual’s terms of employment. (usually financial ones). It may also impact individuals ability to retain a rental property due to possible termination of the tenancy agreement. (usually when debt is included)
  • Evidence of entering into a Trust Deed will be entered on a public register


The Risks of Trust Deed

  • Homeowners may need to release equity from the value of their homes to pay off debts; and that a remortgage may attract higher interest rates or that if no remortgage is available, Trust Deed may be extended for 12 months
  • There are restrictions on the expenditure of a person who enters into a protected trust deed
  • The customer’s lenders may not approve the Trust Deed
  • Only unsecured debts included within the protected trust deed may be discharged at the end of the period and unsecured debts not included remain outstanding



Where Trust Deed is available, there may be other options that are available and suitable for you.