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Can creditors contact me when I am in a trust deed?

Sharon McDougall - Updated - 8th May 2024 - 3 minutes to read

What is a trust deed?

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.

Can creditors contact me when a trust deed is in place?

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.

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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.

Need further advice?

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.

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Sharon McDougall


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