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What you need to know about Trust Deeds

Debt Solutions»Trust Deed»What is a Trust Deed?

What is a Trust Deed?

A Trust Deed is an agreement with your lenders that could help you if you don't think you can afford to repay everything you owe.

There is no guarantee that your lenders will accept the agreement. But if enough of them do, you will be expected to repay as much as you can towards your unsecured debts - normally for four years - and, on reaching a successful conclusion, any remaining unsecured debt is written off.

During your Trust Deed, you'll also be protected against further action from lenders included in the agreement - so they won't be able to make you bankrupt or demand higher payments. If you fail to meet the commitments you agreed to in your Trust Deed, you could put yourself at risk of bankruptcy.

What's a Protected Trust Deed?

A Trust Deed becomes 'Protected' if you receive approval from more than half of your lenders as long as they account for at least one third of your total debt. A Protected Trust Deed is legally binding, meaning your lenders can't change their minds or take any further action against you. At the same time, you are legally obliged to keep up with your payments.

In theory, a Trust Deed can go ahead without being Protected, but it's unlikely you'd be able to do this without your lenders trying to take alternative action. For this reason, all our Trust Deeds are Protected.

If your lenders won't agree to a Trust Deed, we offer a range of other debt solutions that could help.

Bear in mind that like most debt solutions, a Trust Deed will affect your credit rating for at least six years after it is agreed. This could make borrowing more money very difficult during that time. It will also prevent you from holding certain job roles, such as a solicitor.

Your name will also appear on the Register of Insolvencies.

As part of your Trust Deed agreement, you may be expected to release any equity in your property. You may find it difficult to remortgage (or have to pay a higher rate of interest) due to your Trust Deed’s impact on your credit rating. If you aren’t able to release equity, you may have to make extra monthly repayments for up to 12 months.

Find out more in our Trust Deed debt advice articles.

Will my lenders agree to a Trust Deed?

They are likely to agree as long as you genuinely can't afford to repay your debts in full, although we can't guarantee it. We always do our best to show lenders why a Trust Deed is the best option for everyone involved.

Not all your lenders have to agree to a Trust Deed. A Trust Deed involving all your lenders will go ahead as long as at least 50% of them agree and they account for at least 33% of your total unsecured debt.

They may be more likely to agree if you are a homeowner. This is because homeowners on a Trust Deed are normally expected to release some of the money they've put into their home (their 'equity'), which helps to repay more of the debt. However, you won't be expected to sell your home, as you might if you go bankrupt.

If you can't get enough of your lenders to agree to a Trust Deed, we can recommend other solutions that may be better suited to you.

What debts can be included in a Trust Deed?

A Trust Deed can help make all your debts more affordable. Although it will only directly include unsecured debts - such as personal loans, credit cards and overdrafts - it still ensures that secured debts (such as your mortgage) are affordable.

This is because a Trust Deed reduces your unsecured debt repayments to a level you can afford at the same time as your other essential expenses. That way, you can be certain that you won't miss any important payments.

What debts can't be included in a Trust Deed?

As we just mentioned, it won't include your secured debts (mortgages, secured loans, etc.), or things like student loans and court fines. But it will help make sure you can afford to keep paying them.

How long does a Trust Deed last?

Most Trust Deeds last four years. However, in some cases your Trust Deed could be longer or shorter than this, depending on how things pan out.

For example, if you receive a large sum of money during your Trust Deed, you may be able to end it early by paying a final lump sum. Or if you have to take a break in your payments for any reason, your Trust Deed will normally be extended by the same amount of time. (Bear in mind that if you fail to complete your Trust Deed, it could lead to bankruptcy.)

And if you aren't a homeowner or can't release equity for any reason, the Trust Deed could be extended past the usual four years - usually for 12 months - to help you repay more of your debt.

How long does it take to set up a Trust Deed?

It depends how quickly your lenders get back to us, but in general your Trust Deed should be up and running within a few weeks of contacting us. Make sure you keep up with your debt repayments as much as possible until then.

Will a Trust Deed cost me anything?

We charge a flat monthly fee as part of your monthly payment. But don't worry - this won't increase the amount you pay. You'll only ever be expected to pay what you can afford. Read more about our fees here.

How do I apply for a Trust Deed?

Before you apply, request a callback to find out whether a Trust Deed could be right for you. One of our expert advisors will call you to talk you through your options.

If you'd like some more advice before you apply, call us on 0161 667 2599. We'll tell you everything you need to know about your Trust Deed and help you apply if you agree it's the right solution for you. If you like, we can also talk you through what other debt solutions might be helpful in your circumstances.

Trust Deed advice

Could we have a joint Trust Deed?

If you have joint debts that you can't afford, you could both enter into a Trust Deed. Although joint Trust Deeds don't exist, both your Trust Deeds will take your joint debts into account.

Read more