What is a trust deed?

If you're looking to get your finances in order, you may have heard about Trust Deeds – a solution intended for resolving mounting unsecured debts.

Only available for those who live in Scotland, a Trust Deed is a legal agreement between an individual and their creditors overseen by a qualified professional. Agreeing to repay debts over a certain period (usually a minimum of four years), any debts remaining afterwards are typically written off.

To apply for a Trust Deed, your unsecured debt will have to be greater than the value of any assets you hold. This includes property and vehicles, although you will still generally be permitted to hold a small level of assets, such as a low-cost car. We can't help you set up this solution, but we can still detail everything you need to know.

Why is a Trust Deed only available in Scotland?

Scottish residents can sometimes receive additional government support from other UK residents. This is because Scotland is allocated a budget from the UK government and the Scottish government can choose how to distribute this. The rest of the UK hasn’t invested funds into the same debt insolvency options as Scotland, which is why Trust Deeds are currently only available to those living there.

How to set up a Trust Deed

Setting up a Trust Deed is a fairly simple process, although you will need to be aware of the repayment commitment that you are making.

A Trust Deed is a voluntary agreement that is made between an individual and their creditors, but it is legally binding. This means that you need to be sure that you can repay any amount that is agreed on. Fortunately, a trustee will assist you in creating a budget. Once you are willing to agree to the conditions and move forward with an application, your trustee will discuss the terms. If you are happy with these you can sign the agreement.

The trustee will then contact your creditors and outline the amount you can repay each month, giving details of your budget. The deed will then be registered with the Accountant in Bankruptcy (AiB website), where your creditors will be able to access the information as needed.

Once this happens, your creditors have five weeks to either agree to or reject the proposal and notify your trustee with their decision. If your creditors do agree to the terms which have been discussed, your debt will then be considered "protected", which means that creditors will be unable to take any legal action against you to recover any debts. In addition to this, all interest on your debts will be frozen.

Is a Trust Deed the same as an IVA?

Some people think that a Trust Deed is the same as an IVA and this is understandable as they are similar. However, a Trust Deed is only available for Scottish residents, while an IVA is only available for those living in England or Wales.

Furthermore, the eligibility for each of these debt relief processes is different. For example, an IVA usually lasts longer than a Trust Deed, with the average IVA lasting 68 months, compared to 48 months for the average Trust Deed.


Only available for those who live in Scotland, a Trust Deed is a legal agreement between an individual and their creditors overseen by a qualified professional

Advantages of a Trust Deed

There are several advantages of a Trust Deed, the first one being that you can manage your debts more successfully and regain financial control in a fairly short period.

Having a Trust Deed also usually means that you are required to pay back significantly less to your creditors than you would if you chose to manage your debt independently. In addition to this, a Trust Deed protects your debt from increasing due to the frozen interest charges.

Disadvantages of a Trust Deed

Trust Deeds do also come with negatives. For example, you will have to follow a very strict budget for around four years which can be difficult. Furthermore, your details will be added to the Register of Insolvencies for five years, which is a public register.

Furthermore, you’ll need to pay a fee to the trustee for their services. This will, however, be deducted from your Trust Deed fund. A Trust Deed may also affect your ability to apply for certain forms of credit in future, particularly hire-purchase agreements.

Is a Trust Deed right for me?

Whether a Trust Deed is the right form of debt insolvency for you is a personal decision that you'll need to make based on your situation. Consider how you will manage to live on a budget each month, and whether the disadvantages of having a Trust Deed will affect you more than the advantages. At MoneyFixers, we’re here and ready to help you make this choice. Although we can't set up a trust deed for you, if you live outside of Scotland, we'll be happy to discuss a similar option known as an IVA.