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Tackling your debts

FAQS: Trust Deeds Part 1

Posted 10 November 2015

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Make sure you look at our FAQs to find all the answers you need about Trust Deeds.

To carry on with our Scottish focussed week, we’ve put together a two-part frequently asked questions blog post for all of you out there with burning questions about Trust Deeds (TD).

It’s important to note that although we’ve tried to give you clear cut answers where possible, whether or not something will happen or not on a Trust Deed can sometimes depend on your specific circumstances. So bear that in mind, and remember that if you’re seriously thinking about entering into a Trust Deed, you need to seek professional advice from someone like ourselves or from the Money Advice Service.

So without further ado, let’s get stuck into part one, with some quick-fire questions and answers.

Q. How much do I pay on a TD?

A. The amount you pay towards your debts each month is calculated based on what you can afford once your essential bills have been paid and will be different for everyone.  You will usually pay into your Trust Deed for 48 months.

Q. Do I pay all my debts back?

A. You wouldn’t pay everything that you owe back on a TD, as they’re designed for people who can’t repay their debts in a reasonable amount of time. If you stick to the terms of the TD, the rest of your debts will be written off when it came to an end.

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Q. Can my payments change during a TD?

A. What you’re expected to pay can sometimes change, it depends on your personal circumstances.  For example, if you ask for your payments to be reduced, you will have to prove that you can’t afford them anymore. And if your Trustee agrees, then the payments might be lowered.

Q. How long does a TD last for?

A. A typical TD lasts for four years, but they can last longer depending on your individual circumstances.

Q. Will I lose my house?

A. You won’t lose your house if you go on a TD. You may, however, have to release some of the equity in it and put that money towards the TD. If you can’t, the TD will be extended for another twelve months.

Q. Can I get a TD directly with my creditors?

A. No, is the answer here. A TD is a formal debt solution that must be arranged by an Insolvency Practitioner.

Q. Will a TD affect my credit rating?

A. Yes it will. A TD is a form of insolvency and will show on your credit file for six years.

Q. Can I get credit during my TD?

A. It might be possible to get credit whilst you’re on a TD, but it would have to be for an emergency, say if your car broke down or something essential needed replacing around the house. You would have to get permission from your Trustee before borrowing anything over £500.

Okay, that'll do for today. come back tomorrow for part 2.  

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.