A Protected Trust Deed is a Scottish debt solution that enables you to pay one affordable monthly payment towards all of your unsecured debts, typically for 48 months (4 years). Once approved for the Trust Deed you would stop paying your creditors and make one monthly payment to your debt. You would repay what is affordable throughout the 48 months and any debt which is not repaid would be legally written off.

This legally binding agreement between yourself and your creditors offers you protection so your creditors are no longer allowed to request payment. If you enter a Trust Deed then fees and interest is included in the debt solution too. In return, the creditors will receive a fair and affordable percentage of their money back.

If you’re struggling to pay your debt back, live in Scotland and can contribute to a set monthly payment towards your debt, then a Protected Trust Deed could be suitable for you.

Our charity debt advice team can help you understand if you would qualify for this Scottish debt solution which can help you become debt free. A trust deed may be suitable but will depend on your personal and financial situation, which is why it’s important you seek advice before entering the debt solution.

Please call 0800 085 0226 or complete our debt test below to understand which debt solutions you qualify for.

How does a Scottish Trust Deed work?

If you think a Trust Deed would be suitable to help resolve your money worries then we would be delighted to help guide you through the process.

The first step is to call Debt Support Trust on 0800 085 0226 where one of our friendly debt advisers will explain all of the available debt solutions you qualify for, after completing a statement of affairs. We will be able to gauge how much you can afford to repay towards your debt each month and if the Trust Deed is still appropriate, take you through the next stages. You will need to open a new bank account, with a company you don’t owe money to, regardless of which debt solution you enter. If you don’t owe money to the company you bank with, and don’t have an overdraft with the bank, then you may be able to retain your bank account.

We need to gather paperwork so a licenced insolvency practitioner can create a proposal which is then sent to your creditors. The proposal outlines how much you can afford to repay and what the creditors will receive. The insolvency practitioner fees typically come from the monthly repayments, then whatever is left is distributed to each creditor on a pro-rata basis.

Once your proposal is signed your Trust Deed is advertised on the Register of Insolvencies, after which time, your creditors have 5 weeks to accept or object to the proposal. If creditors don’t vote then they are deemed to accept the proposal. If enough creditors reject the proposal then your Trust Deed would not proceed and we would assess other options to repay your debts. If we thought your proposal would not be accepted, for whatever reason, we would inform you before proceeding to the proposal stage.

Once your proposal is accepted you’re Trust Deed is then Protected. Your creditors can no longer take action against you to recover the money they are owed. You would continue to make your monthly contributions until all money owed is repaid. Each year in a Trust Deed your income and expenditure will be re-assessed to ensure you’re paying an affordable amount towards the solution.

Once all payments have been made and equity from assets realised for your creditors, then you would be discharged and any remaining debt would be legally written off, along with interest and fees. You will receive a certificate to confirm you have been discharged and are no longer subject to the Trust Deed rules.

Free Trust Deed Advice

At Debt Support Trust, our charity advisers will explain every appropriate debt solution to ensure you’re getting tailored and transparent advice. This will help you make an informed decision which will empower you to decide which debt solution is right for you.

As a charity, you will never receive a bill for our support and you can speak to us as many times as you require our assistance. Should you choose to speak to us about your debt problems we will listen to your circumstances and provide honest guidance on the best steps to become debt free.

You can start the process today by calling 0800 085 0226 or by completing our debt test.

Benefits of a Trust Deed in Scotland

  1. You only make one monthly payment to your debt and only pay what you can reasonably afford.
  2. Your interest and charges will be frozen and you can take control of your finances once again.
  3. You will not have to liaise with your creditors as this is done on your behalf.
  4. Once the solution is signed and protected, both you and your creditors are legally bound by the agreement, which means should you complete the Trust Deed, you will be debt free having repaid what you can reasonably afford each month. Any debt not repaid will be legally written off.
  5. If you are a homeowner you may be able to retain your property, the insolvency practitioner will only be interested in any available equity
  6. There are no upfront fees for a Trust Deed and typically any fees for the debt solution are taken from your monthly repayments. This means there’s no hidden costs.
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Negatives of a Protected Trust Deed Scotland

  1. If there is any available equity within your property this will have to be included in your proposal.
  2. If you are able to repay all of your debt in the future (for example, a cash windfall, inheritance or lottery win) then you would be expected to do so. If your cash windfall is greater than the amount of debt and fees, then you would retain the remaining balance.
  3. Your employment contract may not allow you to enter a Trust Deed – you would need to check this with your HR department/ employer.
  4. If you enter the debt solution and do not meet the terms of the agreement you are likely to face Sequestration.
  5. Your income and expenditure will be reviewed regularly and your monthly payments may fluctuate up as well as down.
  6. The default applied to your credit file will be listed on your credit report for six years.

How to qualify for a Scottish Trust Deed?

It’s important that anyone entering a Trust Deed is suitable for the solution and is given appropriate advice.

To be accepted for a Trust Deed you must:

    • Reside in Scotland.
    • Be unable to pay your debts as they fall due each month. You must not be able to repay your debts in 48 months or less.  
    • Be able to make a monthly contribution to your debts. If your income is solely reliant on state benefits (universal credits, for instance) then a Trust Deed would not be the best option. If you have non-benefit income as well as state benefits then you could qualify, but your monthly payments must not exceed your non-benefit income.
    • Your unsecured debt must be £5,000 or over. The £5,000 threshold for unsecured debt is per person. If you partner also has debts and wishes to enter a Trust Deed then you each must have £5,000.
    • Not have been made, or voluntarily entered, bankruptcy in the past 5 year.

Fees associated with a Trust Deed Scotland

A Trustee is required to setup and administer your debt solution. The Trustee will be a licensed insolvency practitioner. The debt solution will have fees and charges attached. The fees and charges for your Trust Deed will be made from the money you pay into your debt solution each month. The fees cover

  1. Drafting and administrating the proposal
  2. Corresponding with your creditors
  3. Ensuring your monthly contributions are distributed to your creditors and any other assets are dealt with
  4. Periodic reporting to creditors and the Accountant in Bankruptcy
  5. Dealing with any other issues or concerns during the course of the Scottish debt solution.

Different insolvency companies will charge varying levels of fees depending on their company policy and the complexity of your case. There will be a nominee fee to propose your case then a supervisory fee for managing your case through to the end.

If your debt solution were to fail you would be liable for repayment to your creditors. You may also face Sequestration.

We Have The Answers

A Protected Trust Deed is a formal debt solution which, if accepted by both parties, legally binds you and your creditors to its terms. A Protected Trust Deed usually lasts for 4 years however it can be longer or shorter depending on circumstances.

Debt Support Trust can give you free advice on what debt solutions you would be applicable for. You are under no obligation to proceed with our advice and if you get in touch we will treat all information you share with us confidentially.

If you meet the criteria for a Scottish Trust Deed and wish to proceed then an insolvency practitioner is required to administer your case. A proposal will be sent to your creditors for them to accept, reject or modify.

As long as one third in value (or more) or a majority in number of creditors don’t object to your proposal then your trust deed will be protected.

A Trust Deed will take at least 6 weeks to be set up, however it can be longer. The time taken to establish the debt solution depends on how complex your case is, for example if you have a property then a redemption statement will be required from your mortgage lender to establish your available equity.

If you have the necessary documentation then a Trust Deed can be as quick as 6 weeks to become Protected.

Typically, your plan will last for 4 years, however in some instances this can be extended. You must repay at least 10% of the debt (after fees have been taken) so in some instances your Trust Deed may be extended to help achieve the necessary return to creditors.

Your creditors have the right to reject your proposal. However, it’s unlikely your proposal will be drafted and sent to your creditors if we do not think your creditors will accept it.

If a Scottish Trust Deed is suitable for you then a Debt Support Trust debt advisor will fully advise you on the process and the next steps.

When you put a Trust Deed proposal to your creditors you are acknowledging that you have a debt problem and will not realistically be able to repay the money borrowed. Your creditors will often only get back a proportion of the money they lent you.

Your creditors will make a decision on whether your proposal is accepted based on whether the proposal is the best financial option for them. A Trust Deed is often the best route for your creditors to recoup some of the money owed to them.

Usually an insolvency practitioner will only be interested in the available equity in your house. Your proposal will aim to ensure you keep your property. Depending on your specific situation you may need to downsize your car, however this is determined on a case by case basis. A trained debt advisor at Debt Support Trust will be able to inform you accordingly.

An expression widely used in advertising is to “write off debt”. You cannot simply write off your debt, however if you are suitable for a Trust Deed you repay what you can afford. Any outstanding debt left at the end of the solution will be cleared/ written off.

Debt write off is possible with a Trust Deed and most people entering the solution will not repay all of their debt, so will often write off a percentage of the debt, along with fees and interest.

Once your Trust Deed has been signed and is protected you cannot change your Trustee.

If you come into money whilst in the debt solution you must notify your Trustee. The Trustee has a duty to reclaim as much money as is possible for the creditors; this includes money you may have inherited.

There are some differences between a debt management plan and a Protected Trust Deed. A debt management plan is an informal arrangement with your creditors where you pay an affordable amount each month until all of the debt has been repaid. You have no protection from your creditors in a Debt Management Plan.

A Scottish Trust Deed is a formal arrangement which will allow you to repay a percentage of your debt with the remaining debt being written off at the end of the solution, as long as you meet all of your Trustee’s requests. The debt solution will usually last for 4 years. You cannot start and stop the debt solution like the Debt Management Plan and if you fail to meet your contractual agreement your Trustee may decide to proceed with Bankruptcy.

If you property has negative equity then there is no available money to release and you will be able to retain your property and enter the solution. If your property has equity at the end of the solution you will be required to release this money.

A common question is whether an employer can stop a person entering a Trust Deed in Scotland. To determine whether this applies to you it’s important you check your terms of employment contract. Some industry sectors will not allow somebody to enter the solution (or Bankruptcy) and continue to work in their current role.

You should check your employment contract and even consider speaking to your Human Resources department if you are unsure.

When you enter this debt solution you agree to repay what you can reasonably afford each month, often for a 4 year period.

Each year an income and expenditure will be completed to check your financial situation and to enable your Trustee to report back to the creditors on your case. If your Trustee believes your financial situation has changed for the better (e.g increased wages) then you could be asked to contribute more each month to your proposal. Similarly, if you have less available money to pay towards your Trust Deed each month (e.g. cost of living has risen- petrol, electricity, food etc – has increased) then you will be asked to pay less money on a monthly basis.

A Trustee is required to setup and administer your debt solution. The Trustee will be a licensed insolvency practitioner. The debt solution will have fees and charges attached. The fees and charges for your Trust Deed will be made from the money you pay into your debt solution each month. The fees cover

  1. Drafting and administrating the proposal
  2. Corresponding with your creditors
  3. Ensuring your monthly contributions are distributed to your creditors and any other assets are dealt with
  4. Periodic reporting to creditors and the Accountant in Bankruptcy
  5. Dealing with any other issues or concerns during the course of the Scottish debt solution.

Different insolvency companies will charge varying levels of fees depending on their company policy and the complexity of your case. There will be a nominee fee to propose your case then a supervisory fee for managing your case through to the end.

If your debt solution were to fail you would be liable for repayment to your creditors. You may also face Sequestration.

No, in England, Wales and Northern Ireland there’s a similar debt solution called an Individual Voluntary Arrangement (IVA).