Before you carry out a Trust Deed, you need to be fully aware of both the advantages and disadvantages of this kind of debt management solution.

THE ADVANTAGES OF A TRUST DEED

1. Single affordable payment

A Trust Deed allows you to make a single affordable payment to your creditors each month. This is paid directly to your Insolvency Practitioner  who will deal with your creditors on your behalf. All future letters and correspondence from your creditors will be dealt with by your Insolvency Practitioner .

2. Legal protection from further creditor action

When your Trust Deed becomes protected, pressure from your creditors goes away.

Your creditors cannot take any further action against you to recover their debts. For example creditors can no longer take court action resulting in an attachment of earnings, charging order against your property, warrant sale of household goods or a petition for your bankruptcy.

3. Interest and charges frozen

As soon as your Trust Deed becomes protected, your creditors are stopped from adding any further interest or charges to your accounts.

4. Debt written off

A Trust Deed will usually last just three years and at the end of that term the remaining debt is effectively written off.

This gives you peace of mind that once the Trust Deed is completed you will be left debt free.

5. Discreet procedure

Other than in the Edinburgh Gazette, a Trust Deed is not advertised and your employer is not informed. It is possible for individuals who have Protected Trust Deeds to continue to hold certain public offices, remain as directors and for companies to continue to trade.

6. Better return for creditors

A Trust Deed will provide a better financial return to your creditors than bankruptcy (sequestration). 

To find out about the disadvantages of a Trust Deed continue reading below.

Where to start

• Ask the experts – use our Trust Deed Forum
• Call us now – speak to one of our advisors in confidence to see if a trust deed is right for you.

Take the first step to beating your debt NOW – Call us on 0800 077 6180

THE DISADVANTAGES OF A TRUST DEED

1. Credit rating effected

Your credit rating, and therefore your ability to access credit, will be affected significantly by a trust deed.

The trust deed will be recorded on your credit file and this record will remain for a period of six years from the date that the TD started. Missed payments before the start of the trust deed, and any default notices issued by your creditors, will also remain on your credit record for six years from the date they were added.

These issues will affect your ability to get credit and the terms upon which credit might be offered.

2. Home equity  must be released

If you are a home owner, 100% of any equity  in your property at the time your Trust Deed is protected will have to be realised for the benefit of your creditors.

3. Failure may result in bankruptcy

If your circumstances change, and your insolvency practitioner can’t get creditors to accept amended terms, the Trust Deed is likely to fail. You will still owe your creditors the full amount of what you owed them at the start, less whatever has been paid to them under your Trust Deed.

If your Trust Deed fails, bankruptcy (or sequestration ) proceedings may be taken against you. As such, your home and other assets may be at risk.

4. Name included in Insolvency Register

Whilst your name is not published in the newspaper, it should be pointed out that your Trust Deed will be entered onto the government insolvency register, which is a searchable public database. To review the insolvency register, please see the "Useful Links" box below.

5. Restrictions for Sole Traders

If you are self-employed, there may be some restrictions on your ability to trade. A Trust Deed can however, allow for alternative arrangements to be made available in order to allow trading to continue for future income.