If you have at least £5,000 in unsecured debts and don't think you'll ever be able to repay everything you owe, bankruptcy is not the only option. A Trust Deed could help you write off the unsecured debt you can't afford in typically four years, as long as your lenders agree to accept the arrangement, it is successfully completed and you repay as much as you realistically can in that time.
Request a callback to find out whether a Trust Deed could help you. Or call our expert advisors on 0161 667 2599 to talk through your options.
What is a Trust Deed?
A Trust Deed is a legal arrangement between you and your lenders that involves repaying as much as you can realistically afford towards your unsecured debts for (normally) four years - and then, as long as the Trust Deed has been successfully completed, the rest is written off.
It can be an ideal option for people who have no way of paying everything back, but don't want to go down the bankruptcy route. In particular, homeowners may opt for a Trust Deed, as it doesn't involve selling your home (unlike bankruptcy). However, as part of your Trust Deed, you may be required to release any equity you have in your property. You may find it difficult to remortgage – or have to pay a higher rate of interest – because of your Trust Deed’s impact on your credit rating. If you are unable to remortgage at all, you may have to make additional monthly repayments which will extend the term of your Trust Deed.
Because it's legally binding, a Protected Trust Deed does protect you against further action from your unsecured lenders. That means they can't ask for higher payments or try to make you bankrupt once it's been agreed. But it also means you have to keep up with your payments, or you'll break the agreement. This would put you at risk of bankruptcy.
Entering a Trust Deed will affect your credit rating for six years after the day it starts. It could also prevent you from holding certain job roles, such as a solicitor, and your name will also appear on the Register of Insolvences. But if you're really struggling to repay your debts, it could be the most suitable way for you to regain control of your finances.Learn more about Trust Deeds here
How does a Trust Deed work?
1. We help you work out what you can afford. Your lenders will expect you to repay as much as you can throughout your Trust Deed so your expenditure is restricted. But only once you've covered your other essential costs (bills, food, mortgage/rent and so on) which ensures you won't miss anything important.
2. We talk to your lenders. A Trust Deed can only be agreed if at least half of your lenders (or those who own at least two thirds of your total unsecured debt) do not object. There are no 100% guarantees, but as long as it's clear you can't afford to repay your debts any other way, your lenders are likely to agree.
3. You start making monthly payments to us. This monthly payment will replace all your usual unsecured debt repayments, and will be based on what you can afford after you've covered your other essential living costs. From your monthly payment, we pass on the agreed amount to each of your lenders (minus our monthly fee). You can find out more about our fees here.
4. Your Trust Deed finishes. This normally happens after four years (the standard period for a Trust Deed), but in some cases it can be longer or shorter. As long as everything has gone to plan, any unsecured debt you still haven't repaid by the end of your Trust Deed is written off for good.Find out more about how Trust Deeds work
Who can qualify for a Trust Deed?
Although Trust Deeds have helped thousands and thousands of people get out of debt, they're not right for everyone. To qualify you will have to meet certain criteria:
- You must be based in Scotland
- You must have unsecured debts of at least £5,000 that you can't afford to fully repay within a reasonable period of time
- You must still be able to contribute a reasonable amount towards your debts every month (so you’ll need to have a regular source of income)
If you think you could repay your debts in full, or if you don't think you can commit to regular monthly payments, a Trust Deed won't be suitable. There are other debt solutions that could be more helpful if a Trust Deed isn't right for you.
And remember: even if you meet the criteria, at least 50% of your lenders (who must account for at least one third of the total unsecured debt) will still have to agree to a Trust Deed. If this doesn't happen, you may have to consider your options.Find out if you could qualify for a Trust Deed here
Get in touch
Have any questions about Trust Deeds or any of the other help we provide? Call our friendly advisors on 0161 667 2599. We're always happy to help.