Sharon McDougall - Updated - 26th January 2024 - 3 minutes to read
Less serious than sequestration (bankruptcy), a trust deed is a formal payment plan which allows you to take control of your debts in an affordable manner. The arrangement typically lasts four years, during which you will be required to make one monthly repayment to an appointed insolvency practitioner who will be known as your trustee; they will divide this payment amongst all of your creditors. Once the trust deed reaches its end, your monthly payment will stop and any debt remaining at this point will be written off.
When dealing with mounting debts, many individuals experience a huge amount of stress due to the constant contact from their creditors. This could take the form of letters, phone calls, or even visits to your property from debt collectors or sheriffs. However, once you enter into a trust deed your creditors will be required to direct any contact to your trustee rather than to you personally. This means, so long as you stick to the terms of the agreement, you will not need to have any communication with your lenders and they will be unable to send letters to your address or communicate with you via any other means. This can be a huge sense of relief to those who have felt hounded by their creditors in the weeks, months, and even years before entering into a trust deed.
If in the rare instance that you are in a trust deed and a creditor who is included in this agreement makes contact with you, you should refuse to engage in lengthy conversation and simply refer them to your trustee. It is also worth you telling your trustee about any contact of this nature so that they can reiterate to your creditors the terms of the trust deed.
It is important to remember that this only applies if your trust deed is protected. An unprotected trust deed is an informal arrangement and can therefore be broken by either side at any time. This means interest will not be frozen and your creditors will be able to contact you to demand payment. With this in mind, it is important that your trustee takes the necessary steps to give your trust deed ‘protected’ status.
Get a rough indication of what your monthly repayments might be under each of our different debt solutions.
What does it mean when a trust deed is ‘protected’?
Once your trustee has put together your trust deed proposal, they will contact all of your creditors to make them aware of the situation. At this stage they will recommend that the trust deed be awarded protected status. Unless over 50% of your creditors, or creditors totalling over 30% of your debt, object to the trust deed, it will then become protected. If a creditor does not respond within five weeks then it is assumed that they have agreed to the trust deed.
Although this may seem like a nerve-wracking time, it must be said here that the majority of trust deeds are accepted by creditors and therefore become protected. This is because a creditor would rather receive a reduced sum via the trust deed, than nothing at all which may be the case should you be unable to enter into such an arrangement to manage your debts. Once a trust deed is protected, all of the debts included in the agreement will be frozen meaning no further interest can be added and all contact must go through your trustee.
As trust deeds are only available in Scotland, it is vital that you seek the advice from those who are familiar with the Scottish system and the different debt options which are available here. Scotland Debt Solutions have been helping Scots in debt for almost 30 years, and with five office located across Scotland we can provide the specialist help and advice you seek to take control of your debts regardless of where in the country you are based. Contact our team on 0800 063 9250 to take your first step towards a debt free future.
Borrowing money when you’re already deeply in debt requires careful consideration, and consultation with your trustee, as there are various factors associated with further borrowing in this situatio...
If you’re about to be discharged from a Trust Deed, you may be wondering to what extent your ability to obtain a mortgage has been affected.
If you’ve lost your job, state benefits and tax credits can provide vital financial support to see you through this tough time and help you avoid taking on too much debt while you look for more work...
Why Choose Us
Speak Direct With
A Qualified Adviser
We Don't Operate
5 Offices in Scotland
Ask us About
Fully Regulated Advisors
From a Reputable Firm
Helping Scots Get
Out of Debt Since 1989
We'll give you a call
Our Scottish based team can help advise you on your debt problems.
Our personalised debt report will help you better understand your financial position and see where your money is going.
Arrange a call with an expert advisor at a time to suit you or contact our team via WhatsApp for immediate help and advice.
We can help you with...
Sequestration is the Scottish version of bankruptcy and may be suitable for you if you do not have the money to pay back your debtsFind out More
A Trust Deed involves making a monthly contribution to your debts for up to four years. After this time any remaining debt included in the Trust Deed will not need to be paid.Find out More
A Debt Arrangement Scheme (DAS) lets you pay off your debt through a series of manageable instalments over a reasonable length of time.Find out More
Our Insolvency Practitioners are regulated by ICAS or the IPA and our firm is authorised and regulated by the Financial Conduct Authority
Fees and Information: There are fees associated with our services. These will be fully explained before entering into any of the personal debt solutions referred to on this website. Full details of our fees and how these are charged are fully explained to you prior to you committing to any particular service.