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Can you pay off a trust deed early?

Sharon McDougall - Updated - 29th April 2024 - 2 minutes to read

How to 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 procedure are written off. It you enter into a trust deed, it also legally binds you and your creditors.

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.

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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 in some circumstances, 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 the first issue to consider is what the full repayment would comprise:

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

When 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.

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. 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. We offer free, same‐day meetings, and operate a network of offices around Scotland.

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Sharon McDougall


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