What is a Trust Deed and how can it help?

It's an agreement with your lenders that enables you to repay as much of your unsecured debts as possible over an agreed period (normally three years), and writes off the rest - as long as you've fulfilled your side of the agreement. Note that any unsecured debt that's not included in your Trust Deed may still have to be repaid.

During a Trust Deed your normal unsecured debt repayments will be replaced with one affordable monthly payment. This will be based on what you can afford after you've taken care of your other living costs, such as bills.

Trust Deeds are only available to Scottish residents.

Do I qualify for a Trust Deed?

You may qualify for a Trust Deed if:

• You are a resident of Scotland
• You can't afford to repay your unsecured debts within a reasonable period of time
• You can commit to (smaller) monthly payments

If so, we can draw up a 'Trust Deed proposal' that shows your lenders how we think your Trust Deed should work out. Your Trust Deed can begin if it's accepted by at least half of your lenders, representing at least two thirds of the debt value. However, even if you meet the above criteria, there may be more appropriate solutions available for someone in your circumstances. Talk to one of our expert advisers on 0800 195 2714 to find out for certain whether a Trust Deed is right for you.

How long does a Trust Deed last?

The majority of Trust Deeds last for three years. However, your Trust Deed could last longer if there is a good reason to extend it.

For example, your lenders (or your Insolvency Practitioner) might argue that three years doesn't give you enough time to repay a reasonable amount of debt.

Alternatively, you may need to take a short break from your Trust Deed if there is a financial emergency (e.g. expensive car repairs). If so, you'd still have to make the same number of payments in total, meaning your Trust Deed would be extended by the same length of time as your break.

Can a Trust Deed help with secured debts?

It can help to make them affordable again, but it won't actually reduce secured debt repayments (e.g. your mortgage). The idea of a Trust Deed is that your unsecured debt repayments will fit around your other priority living costs - including any secured debts you owe.

How much would my monthly payments be?

It depends on your situation. Before your Trust Deed starts, we'll help you work out how much you can afford to pay each month, taking all your other essential living costs into consideration.

You'll be expected to pay as much as you can throughout your Trust Deed, so your lenders may object if they think you're spending too much on other things. It also means your payments could change if your available income increases or decreases. We'll carry out regular reviews of your circumstances to help ensure that everything is running smoothly.

Are there any downsides to a Trust Deed?

As with any debt solution, there are a few things you should be aware of before entering into a Trust Deed. In particular, it will be recorded on your credit history for six years and this could make obtaining further credit a lot more difficult during this time.

If you're a homeowner, you'll normally be required to release most of the equity in your home as part of the agreement. The impact of your Trust Deed on your credit rating could make it more difficult to get a mortgage - and mean that you're charged a higher rate of interest if you do.

But not getting the help you need could have even more serious consequences - so if you're struggling, it's important that you get in touch.