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Can you pay off a trust deed early?

Sharon McDougall - Updated - 17th March 2025 - 2 minutes to read

Can you make early repayments towards your trust deed?

A trust deed is a formal debt solution for people in Scotland who are in unmanageable debt. It helps them to escape the relentless creditor pressure that can be experienced in this situation, and allows for a fresh start with a financial ‘clean slate.’

The trust deed arrangement is made official following formal negotiations with creditors, and any debts remaining at the end of the agreement are written off. Once a trust deed is agreed by creditors it becomes 'protected' and is legally-binding on all parties. 

This means creditors aren’t allowed to contact you or add charges/interest to their debt, but it also means that you must make the agreed payments in full and on time for the duration of the arrangement which is typically four years. 

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How long does a trust deed usually last?

A typical trust deed lasts for four years, but can continue for a further year in certain instances. So is it possible to pay off your trust deed early, and what do you need to consider if this is an option?

There may be situations where paying off a trust deed early is possible, but you would be required to make a full repayment of the amount owed in one lump sum in order to do this. The first issue to consider is what the full repayment would include:

  • The total debt
  • Interest and costs of the process
  • The trustee’s fees

How could you repay a trust deed early?

You sell your home

A significant benefit of entering into a trust deed is that, unlike sequestration, your home isn’t typically at risk. Instead, if there’s sufficient equity in the property to make it worthwhile, the trustee may ask that you remortgage to release funds for your creditors. Depending on your circumstances, you might decide to sell your home if you can pay off the trust deed early with the proceeds and still have enough money left over to allow you to move to a new property.

You receive an inheritance or windfall

If you receive a lump sum payment, perhaps an inheritance or windfall such as a lottery win, you must tell the trustee straight away even if you may not be planning on using it to repay your trust deed.

This is part of your obligation when entering a trust deed as it may allow you to pay off all your creditors in full, plus the interest and cost elements of the process.

You’ve received a redundancy payment

In the case of a redundancy payout, the trustee is likely to look at your employment situation as a whole. For example, whether you’ve already secured another job, or if you’re relying on your redundancy pay to meet essential outgoings until you find work.

In the case of any lump sum payment that you receive during your trust deed term, however, you need to provide proof of where the money has come from and allow the trustee to make their decision on the best way forward.

What happens when a trust deed ends?

When a trust deed ends, your trustee will inform your creditors who should notify the credit reference agencies that it’s been successfully completed. It’s worthwhile checking up on this as it allows you to start rebuilding your credit file.

The trustee will also issue a discharge certificate to confirm that the trust deed has finished, whether that’s earlier than anticipated or it’s run the full term. Additionally, the trust deed should be removed from the public record – the Register of Insolvencies – by the Accountant in Bankruptcy (AiB).

For more information on trust deeds, please get in touch with our expert team at Scotland Debt Solutions. We’ve been helping Scottish residents to escape debt since 1989, and can provide the independent advice you need during these challenging times. 

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Sharon McDougall Square

Sharon McDougall

Manager

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