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What is a Trust Deed? Complete Guide 2022

what is a trust deed

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Many people have suffered with unsecured debt. 

A trust deed could be just the thing you have been looking for to pay off your debts

I have compiled this complete guide with all the necessary information you need about debt management

It includes FAQs and everything you need to know before applying for a Scottish trust deed

What is a trust deed in Scotland?

A trust deed is a legally binding agreement that is made between the creditors and the debtor. It is a debt solution that helps you pay off your unwanted debt. 

This includes all types of unsecured debts. 

An affordable monthly payment is made to your creditors for an approximate period of 4 years

However, your credit rating could be affected if you take longer. 

In this case you consent to pay back a decided portion of your income to protect your property and other assets.

How will I benefit from a trust deed?

There are a number of benefits you could get from a trust deed

These include:

  • Your trustee will contact your creditors for you. 
  • You could apply for a moratorium to the Accountant in Bankruptcy. This could prevent your creditors from taking actions to recover their money.
  • You could be able to pay your bills.
  • You may not be barred from employment and public offices.
  • Legally you can not be stopped from borrowing money.
  • You might be able to get a mortgage or a credit card.
  • Trust deeds normally end after four years. This means most of your debts will be paid.

What happens if you receive a windfall during your trust deed?

In case of a windfall, you will be expected to pay off your debts in favor of your creditors.

If you have received this type of payment it is important you inform your insolvency practitioner immediately. 

Your trustee will keep record in the register of insolvencies and make changes to your agreement terms, if necessary. 

What are the advantages of a protected trust deed?

A protected trust deed is made there a licensed insolvency practitioner. 

The advantages are similar to a protected trust deed.

These include:

  • You might not have to sell your house if you make your monthly payment on time. 
  • Payments are made after deducting your living cost
  • In case of change in circumstances your trustee will review your case and make adjustments to your monthly payments. 
  • Your creditors can not harass or force you into making payments
  • Loan period is 4 years after which you will be debt free
  • You could continue even if you have your own business
  • It may not affect your job
  • After your trust deeds are protected, it may help prevent and uplift your earning and arrestments
  • Your credit rating could improve if you are able to pay back in time.

What are the risks involved with a trust deed?

There are a number of risks involved

I will list them down for you:

  • Monthly payments will have to be paid for at least four years. 
  • Credit ratings could worsen.
  • It could be difficult to get a mortgage or any type of loans in the future.
  • You might have to sell your assets. This could include your car or home.
  • You might not be able to pursue a personal business. 
  • Increase in income or money could be claimed by your trustee.
  • Any type of compensation such as inheritance has to be reported to your trustee.
  • Your trustee could potentially make you bankrupt.
  • In case of a low income it may not be the best debt solution for you.

How do I apply for a trust deed?

Applying for a trust deed is not as difficult as you think.

The first step is contacting a debt advisor

Before your trust deed, you may be asked a number of questions related to your financial situation. 

Then, you need to submit documentation. These include:

  • Your bank statements
  • Pay slips
  • Benefit award letters
  • Household bills

Your trustee will evaluate your documents and set up a trust for you. A formal trust deed document is produced, which includes how your debt management process will be conducted. It will include how much affordable monthly payment you can make.

After evaluating your income and expenditure, a trust deed is made. This is a legally binding document that includes specifications made based on mutual agreement. The amount of monthly payment excludes your lifestyle expenses.

A legal proposal is sent to your creditor. This includes the payment subject. Moreover, all rights reserved are with the trustee.

Your trustee could ask you to open a new bank account. 

I would advice you to read your documents thoroughly before signing the final paperwork.

How long does it take for a trust deed to get completed?

On average it could take 5 to 8 weeks for an insolvency practitioner (IP) to draft a proposal for your trust deeds.

However, insolvency practitioners could take longer based on the complexity of your case.

Which type of creditors can be included in my trust deed?

I will list down some significant creditors you could include in your trust deed.

These include: 

  • Debts you owe to a bank
  • Debt you owe to finance companies 
  • Credit and store cards
  • In- land revenue 
  • Loans made by friends and family 

Is it possible to cancel my trust deed?

A trust deed is a legal agreement. You may not be able to cancel it.

However, you could get debt advice.

Do I need to be employed to get a trust deed?

You are expected to have a job to apply for a trust deed

Moreover, you should have a disposable income ranging from £150 to £200 to make payments. 

How does a protected trust deed differ from a trust deed?

A protected trust deeds are made through a licensed insolvency practitioner (IP). In this case, your creditors can not take further actions to recover the money you owe them. 

However, a trust deed is when the volunteer transfers rights to a trustee. The creditors can not contact the debtor. The trustee could sell the items to pay your creditors on a monthly basis.

What should I do if I am unsatisfied with my trustee?

Since your trustee does all your trust deed work for you, I would advise you to talk to them. It is important you share your concerns and come up with a mutual agreement. 

Moreover, the Accountant in Bankruptcy can look over your complaint. They have authority to issue a direction if your case has not been handled appropriately. 

What debts can be included in my trust deed?

There are a number of unsecured debts that can be included in your trust deed.

These include:

  • Personal loans
  • Payday loans
  • Credit cards
  • Council tax arrears
  • Catalogues
  • Credit unions
  • Mortgage shortfalls
  • Vehicles (your car)
  • HMRC bills in case you are self employed

What debts are not included in a trust deed? 

Secured debts are not a part of trust deeds.

These could include:

  • Business loans
  • Property loans
  • Loans for land
  • Home equity
  • Student loans
  • Debt incurred through fraud
  • Child support
  • Maintenance support arrears

Moreover, court and student loans are not a part of a trust deed.

How are trust deed payments calculated?

Your trust deed payments through your disposable income. This is an amount based after deducting your essential everyday cost. The remaining cost will be paid to your creditors.

Your essential could include:

  • Rental payments including property
  • Travel care 
  • Childcare expenses
  • Car finances
  • Food and lifestyle 
  • Utility bills 
  • Mortgage
  • Running cost of assets
  • Personal loans

What is an alternative of a trust deed?

You could apply for alternative debt solutions. 

These include:  

  • Debt Arrangement Scheme (DAS) for your unsecured debts.
  • Sequestration, also referred to as a sequestration
  • Minimal Asset Process (MAP) in case of low income and assets

You might want to contact someone from an organization authorised and regulated by the financial conduct authority for advice.

Can a trust deed affect my mortgage?

A trust deed can not apply to your mortgage. This is mainly because trust deeds only cover unsecured debts. These include credit cards and your personal loan.

Is it possible to come out of a trust deed?

Yes, you might be able to come out of a trust deed.

However, you need to contact your trustees to advice you better. In case your trustees agree, they will write to your creditors. 

This could depend on the debt level and if your creditors agree to terminate the trust deed. 

How much fees do I have to pay for a trust deed?

There is no set up fees for a trust deed.

However, there could be fixed administration fees. 

Moreover, you could be expected 

Frequently Asked Questions (FAQs) 

What does a windfall refer to?
A windfall is an amount of money payable to you while you are in a trust deed. This could include: Inheritance payments, compensations, or even lotteries.
What is the minimum amount of debt required to be considered for a trust deed?
Having a debt over £5,000 could help you get a trust deed easily. On average your debt should range between £7,000 to £8,000.
What is a default notice?
A default notice is a reminder sent in case you have missed your monthly payments. Moreover, it could be sent if you have paid less than the required amount. A default notice gives you a minimum of two weeks to pay your missed payment.
Is it possible to arrange my own trust deed?
You might be able to arrange your own trust deeds. However, if you are a homeowner, you might need to sell your home to make your debt payments.
What is the duration for trust deeds?
On average your trust deeds could last for up to 4 years.
What does the trustee do in a trust deed?
A trustee makes debt payments to your creditors. This way you do not have to interact with the people you owe money. Moreover, they help provide debt solutions.


Having a large amount of unsecured debt could be stressful. However, if you hire the right people, it may become easy for you to pay off your debt and save your assets. 

Follow the guidelines carefully. It will help you get all the essential information you need to pay off your unsecured debt.

The step by step method will help you provide easy solutions for your debt problem.

For legal debt advice, I would suggest you contact your practitioner.


Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring