What happens after a Trust Deed?

If you live in Scotland and you're having serious problems with your unsecured debts, a Trust Deed could be the best step for you to take.

A Trust Deed is a form of legally binding insolvency solution. The basic idea is that you'd repay what you can afford for an agreed period of time (usually three years) and your unsecured lenders will agree not to take any further action against you - and write off the portion of the debt you've not been able to repay once it comes to a successful conclusion.

Bearing this in mind, entering a Trust Deed could really help to take a weight off your shoulders - you'll know that you're dealing with your unsecured debts, rather than watching them get worse and worse.

You'll find more answers to common questions about Trust Deeds on this page.

What is a Trust Deed?

A Trust Deed is a Scottish-only type of insolvency. It could help borrowers who have a significant amount of unsecured debt (e.g. catalogues, credit cards and overdrafts) - but who can't afford to repay what they owe in a reasonable period.

If you enter a Trust Deed, you will begin making a single, reduced payment per month. These payments will be calculated so they still leave room for all your essential monthly outgoings (such as rent/mortgage, bills and food) - so you should be confident you're not repaying more than you can afford each month.

As part of the agreement, your lenders will agree not to take any further action against you - as long as you keep up with your agreed payments.

A Trust Deed will affect your credit rating for six years - which means it could be difficult to get further credit during this time. If you're a homeowner, some equity release may also be required to repay your lenders more of what you owe them.

Having said that, a Trust Deed could still be the best way of dealing with problem debts - and stopping your situation from getting any worse.

You can find more facts about Trust Deeds here.

What happens when a Trust Deed ends?

A Trust Deed typically lasts for three years. On successful conclusion, your unsecured lenders will write off any included debt that you simply can't afford to repay, leaving you to get on with a life free of unsecured debt. Any secured debts you have won't be written off - you'll still have to repay them as agreed.

Because of the effect on your credit rating, taking out further credit is likely to be difficult for the next three years (if it was a 'typical' three-year Trust Deed). But people who have been on a Trust Deed may decide to avoid unsecured debt entirely in the future - so they could avoid the problems they've had in the recent past.

If you're unsure whether or not a Trust Deed is right for you, our solution finder could give you an indication.

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Related resources

• How to draw up a Trust Deed
• Will a Trust Deed affect my credit rating?
• What are the benefits of a Trust Deed?
• IVA or Trust Deed: which is right for me?
• How long do Trust Deeds last?
• Debt Arrangement Scheme and Trust Deeds - what's the difference?
• Trust Deeds: who is the trustee?

Tags: unsecured debt, debt, trust deed, debt, credit card, overdraft, credit rating

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