Trust Deeds (Scotland only)

What is a Trust Deed?

Trust Deeds are quite simply a legal agreement between debtors in Scotland and their creditors to pay off their debts over a pre agreed period of time. The Trust Deed is underpinned by the Bankruptcy (Scotland Act) 1985 which created the ‘protected’ trust deed, administered by a qualified Insolvency Practitioner (IP) on behalf of the creditors. Trust deed fall into two types; voluntary and protected.

A voluntary Trust Deed is where an agreement is made between a debtor and their creditors to repay part of what they owe but this type of Trust Deed is not binding on creditors unless they all agree to its terms.

A protected Trust Deed however goes one step further by making it binding on all creditors.. When a trust deed is protected non-agreeing creditors are denied from enforcing their debt by sequestration or any other means, although they can of course apply to claim a payment from the trustee. In many respect the process is very similar to the IVA available in the rest of the UK however a Trust Deed is unique to Scotland under Scottish Law.

What are the benefits of a Trust Deed?

  • You only have to make a single affordable payment each month
  • All interest and credit charges on your existing debts will stop
  • All your creditors, even those who don’t agree with it, are bound by the terms of the agreement
  • Creditors can’t take any further action against you, so no more hassling calls or letters
  • Your outgoings are fixed for a sensible duration (usually three years)


What are the disadvantages of a Trust Deed?

  • Entering into a Trust Deed will affect your credit rating
  • All your assets and liabilities have to be declared upfront, and you will be required to release any equity you may hold in property. Any large or valuable assets may also be sold to realise their value
  • You will not be allowed to hold a post of a Director in a Limited Company
  • The details of your Trust Deed will be published in the Edinburgh Gazette
  • If creditors agree to your Trust Deed it will be recorded in the Register of Insolvencies
  • Failure to meet the payments of a Trust Deed can mean that you may be made bankrupt

How much does a Trust Deed cost?

The cost of a Trust Deed will vary in each case depending on how much you owe and to how many creditors. There will be a fee from the Insolvency Practitioner assigned to your case and there will be an ongoing fee for the management and disbursement of the payments you make each month. An average Trust Deed will typically cost around £4000 plus VAT, on top of which there will be expenses which will need to be added. The ongoing management fee however will be taken from your monthly payment before it is disbursed, so whatever your agreed monthly payment, that is all you will pay.

What next?

If you live in Scotland and feel that you might qualify for a Trust Deed the first thing you should do is pick up the phone and call us on 08002 800 492. At Money Advice Group we deal with hundreds of people in debt every week and our qualified advisors are used to helping people with large amounts of debt. Please be aware that a Trust Deed may NOT be the solution you are offered, as after we have assessed your needs carefully we will advise what we believe to be the most appropriate course of action to help your personal debt situation. This may be a Debt Management Plan (DMP), a Debt Consolidation Loan or even Bankruptcy however it all depends on your personal circumstances. If you decide to go with the solution that Money Advice Group you should be aware that fees will be payable. These are clearly shown below in our Fees and Terms and Conditions link at the bottom of the page.