How Much Debt Do I Need to Enter into a Trust Deed?

Are you wondering how much debt you need to enter into a trust deed? You’re not alone! Every month, our website is visited by over 170,000 people who are looking for guidance on similar matters.

In this easy-to-understand guide, we’ll address the following questions:

• What is the minimum amount of debt required to enter a trust deed?
• How much debt do you need on average to enter a trust deed?
• What amount of income do you need for a trust deed?
• What type of debts can you include in your trust deed?

Our team has lots of experience dealing with trust deeds and debt. We know the stress it can cause, and we’re here to give you the facts you need in a simple way you can understand.

Let’s dive in!

What is the minimum amount of debt required to enter a trust deed?

There are no definite criteria for entering trust deeds. 

However, you could be expected to have a minimum debt amount of £5,000. Otherwise, your trustee might ask you to look into alternate debt solutions, such as a Debt Arrangement Scheme (DAS)

How much debt do I need on average to enter a trust deed?

You are expected to have debts estimated between £7,000 to £8,000.

What amount of income do I need for a trust deed? 

You are expected to have enough income to make monthly payments, after deducting your disposable income. This is the amount excluding your living expenses. 

In case you have assets, including a car or a home, you would be expected to have a higher level of disposable income to make your monthly payments. 

It is also important to understand that if you are able to make your monthly payment within four years, you might not be able to convert your trust deeds to a protected trust deed.  

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Am I expected to disclose my entire income?

Yes, it is crucial that you are honest about your income. 

This is important because your trustee will provide an adequate debt solution on the basis of your income. 

If your creditors find out about your expenditures and assets later, legal action could be taken against you. Moreover, your chances of getting any type of debt relief could be eliminated. 

Additionally, your creditors could be forced into selling your assets to pay off their amount early. 

You could even be forced into a sequestration. This means your name will be entered in the register of insolvencies. Hence, your credit rating may be affected significantly. 

Can I include my Payment Protection Insurance in my trust deed?

Yes, it is important to understand that any type of income you receive must be included in your trust deed. 

You could be advised not to enter a trust deed if you are applying for a PPI and are expecting to receive a greater amount of income compared to your debt. 

However, your trustee could advise alternate debt solutions for you if this is the case. 

What type of debts can I include in my trust deed? 

Any type of unsecured debt could be included in a trust deed. However, secured debts cannot become a part of your trust deed under any circumstances. 

Examples of unsecured debts include: 

• Credit cards
• Bank Overdrafts
• Guarantor Loans
• Everyday Loans 
• Council tax Arrears
• Credit Union Loans 
• Bounce Back Loans
• Personal loans 
• HMRC debts
• Rent arrears
• Outstanding car parking charges 

Examples of secured debts include: 

• Student loans 
• Court fines 
• Mortgages
• Logbook loans
• Hire purchase agreement 
• Debt accrued through fraud 

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Are there any other options?

Deciding how to tackle your debt is a very personal decision and you certainly can’t get the answer through a simple blog post.
It’s made worse by the strong opinions you’ll often find online.

The best option is to get help from a debt expert to find out all your options and see which is right for you.

I’ve partnered with The Debt Advice Service and you can access their expert support by filling out the short form below.

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How will I know if trust deeds are the best option for me?

Trust deeds work best for people who have unwanted debts and are unable to pay them off. 

If you are able to make monthly payments for at least four years, trust deeds could be the best solution for you. 

Moreover, if you have assets that can be sold to raise money for your creditors, a trust deed might also be beneficial for you. 

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