Frequently asked questions about Trust Deeds 

Got a question about Trust Deeds?

PayPlan have put together this list of frequently asked questions, so hopefully you’ll find your answers here.

If your question isn’t listed however, or if you would like further advice about Trust Deeds and any other debt solutions that may be available to you, don’t hesitate to get in touch.

Our Freephone number is 0800 280 2816.

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  1. Will a Trust Deed affect my credit rating?
  2. Is there a minimum debt level for a Trust Deed?
  3. How long will it take to set up a Trust Deed?
  4. How long does a Trust Deed last for?
  5. What are the alternatives to Trust Deeds?
  6. What is a Protected Trust Deed?
  7. Who pays the fees for my Trust Deed?
  8. Will I lose my car in a Trust Deed?
  9. Will I lose my home in a Trust Deed?
  10. Will my personal possessions be taken away in a Trust Deed?
  11. What happens if I come into money in a Trust Deed?
  12. Can I borrow money whilst in a Trust Deed?
  13. What happens after I complete my Trust Deed?
  14. What happens if my Trust Deed is not ‘protected’?
  15. What if my financial situation changes and I can’t make my Trust Deed  payments?
  16. Will it be made public knowledge if I enter into a Trust Deed?
  17. Can I arrange a Trust Deed directly with my creditors?
  18. What do I say to my creditors while my Trust Deed is being set up?

  1. Will a Trust Deed affect my credit rating?
Yes, a Trust Deed will remain on your credit file for 6 years – or until it completes, in the unlikely event that it lasts longer than six years. Any default notices that are received after your Trust Deed is signed, can be back-dated to the date of signing, so they will only stay on your credit file for a maximum of 6 years from the date your Trust Deed is signed.  
  1. Is there a minimum debt level for a Trust Deed?
Yes, you need to owe a minimum amount of £5,000 to your unsecured creditors. Any secured loans (such as mortgages and hire purchase) are not included in this amount. Similarly, student loans and Court Fines cannot be included in a Trust Deed.  
  1. How long will it take to set up a Trust Deed?
The timeframe to set up a Trust Deed varies depending on your individual circumstances. However, on average it will take between 8-10 weeks to obtain protection, which includes the 5 weeks your creditors have in which to object to your Trust Deed if they wish.

Our associated Trust Deed provider Payplan Scotland Limited will always look to ensure your Trust Deed is set up as quickly as possible for you.  
  1. How long does a Trust Deed last for?
A Trust Deed generally lasts for a minimum of 4 years (or 48 months). However, depending on your individual circumstances, this timeframe could be increased by 12 months – if, for example, you need to compensate your creditors for any equity in your property.  
  1. What are the alternatives to Trust Deeds?
There are alternative solutions such as sequestration, Minimal Asset Process (MAP), Debt Arrangement Scheme (DAS) and Debt Management Plan (DMP). Further information of these options can be found here.  
  1. What is a Protected Trust Deed?
A Protected Trust Deed is the same as a normal Trust Deed, only it offers you more protection. If your creditors do not object to your Trust Deed proposal, your Trust Deed would become a Protected Trust Deed. This means your unsecured creditors will not be able to take any legal action against you, and it also protects you from sequestration.  
  1. Who pays the fees for my Trust Deed?
Unlike with a lot of companies, PayPlan Scotland Limited don’t charge any upfront fees. They understand that you’re already struggling to make ends meet – so it’s not realistic to expect you to be able to afford any upfront costs.

Instead they deduct their fees from your monthly agreed payment before distributing the rest to your unsecured creditors. You won’t notice any charges – because you just pay the amount agreed in your Trust Deed proposal for the same period of time.  
  1. Will I lose my car in a Trust Deed?
Realistically, it is unlikely that you will lose your car.

If your car is worth less than £3,000, it is not even classed as an asset within the Trust Deed – and therefore not considered as a realisable asset. If your car is worth £3,000 or more, it will be included within your Trust Deed – but you will of course still be able to use the vehicle during the Trust Deed.

Your car will be revalued at the end of your Trust Deed. At this time, if it is worth less than £3,000, your car will not need to be realised within your Trust Deed. If it is still worth over £3,000, you will need to realise the value of the car – either by selling it, or paying sufficient funds into your Trust Deed to compensate your creditors for allowing you to keep the car.  
  1. Will I lose my home in a Trust Deed?
In practice, it is highly unlikely that your home will be sold against your will.

It is possible to exclude your home from the Trust Deed completely, but it is unlikely that creditors will agree to ‘protect’ your Trust Deed if you do this. If your trust deed is unprotected your creditors could take legal action against you. 

Your home will be professionally valued before you enter the Trust Deed so that the equity in your property can be calculated.If there is equity in your property you will be asked to remortgage. If you can’t afford to, you will then need to consider how you can compensate creditors for the equity in your property. There are numerous ways this can be done – including selling your property if you wish, introducing a third party contribution, mortgage-to-rent scheme, or extending your Trust Deed to compensate creditors for the equity.

Extending your Trust Deed to compensate creditors for the equity is the most common outcome, and your creditors then have the choice whether or not to ‘protect’ your Trust Deed – depending on whether or not they are happy with this solution. If they object – and ask you to sell your property – you can reject this request, but it will mean that your Trust Deed will become ‘unprotected’.

Payplan Scotland Limited will always discuss the options regarding your property right at the beginning, and come to an agreement with you before you enter your Trust Deed – so you know how your property is to be treated before your Trust Deed is ‘protected’.  
  1. Will my personal possessions be taken away in a Trust Deed?
No, any items that are essential for your day-to day-living will not be taken away from you.  
  1. What happens if I come into money during my Trust Deed?
Any money that is received whilst in a Trust Deed – whether it be an inheritance, lottery win, mis-sold PPI, windfall etc – will need to be paid into your Trust Deed. This money will then be used to help pay towards your creditors, and increase the overall amount paid to them.

If you were to receive an amount that was enough to cover your total debts, you would be required to repay 100% of your debt, plus any fees and statutory interest accrued – and any funds left after this would be returned to you.

If you receive an increase in income – or any bonus/overtime/commission – a proportion of this will also need to be paid into your Trust Deed.  
  1. Can I borrow money whilst in a Trust Deed?
It is advisable not to take out any further credit. However, in some circumstances this is unavoidable. We would always advise you to discuss this with us before taking out any further credit.

Any credit taken out after you have signed the Trust Deed will not be included within your Trust Deed as a debt – and you will then have to make the monthly payments to this debt separately out of your income. It may be difficult to make the monthly Trust Deed payment and repay this debt at the same time – which could lead to difficulties.

It is likely that any credit taken out once you’re in a Trust Deed will attract a high interest rate, as your credit rating will be adversely affected while you are in the Trust Deed. With any credit taken out after the Trust Deed is signed, the creditor could still take legal action against you if you were to fall behind with payments.  
  1. What happens after I complete my Trust Deed?
After all of your agreed payments have been made – and providing you met all your obligations whilst in the Trust Deed – your Trustee will apply for your discharge. This will mean that your unsecured creditors can no longer pursue you for any of the debts included in your Trust Deed, and they will be fully written-off.  
  1. What happens if my Trust Deed is not ‘protected’?

If your Trust Deed is not ‘protected’, it’s still unlikely that you will forced into sequestration. You will have the opportunity to consider other options – such as:

  • Propose another Trust Deed: creditors should give us reasons for objecting to your Trust Deed. If you can overcome these objections, it may be possible to amend and propose another Protected Trust Deed
  • Enter into another debt solution: if you are not happy with the ‘unprotected’ Trust Deed and can’t achieve ‘protected’ status, we can help you look at – and apply for – alternative debt solutions
  • Petition for sequestration: if you wish, you could petition for your own sequestration
  1. What if my financial situation changes and I can’t make the Trust Deed payments?
If your income or situation changes during your Trust Deed, you should never struggle alone. There is a degree of flexibility with Trust Deeds – so we may be able to reduce your payments for a while to accommodate this.

Always talk to an adviser as soon as possible – because missing payments could ultimately lead to the failure of your Trust Deed.  
  1. Will it be made public knowledge if I enter into a Trust Deed?
Yes – your Trust Deed will be recorded on the Register of Insolvencies. Any member of the public can access the Register of Insolvencies via the internet.  
  1. Can I arrange a Trust Deed directly with my creditors?
No. To be able to propose a valid Trust Deed, you will need the services of a licensed Insolvency Practitioner (IP). The IP will also supervise and review your Trust Deed throughout the duration of the arrangement.  
  1. What do I say to my creditors while my Trust Deed is being set up?
If you receive a phone call from any creditor while you are setting up your Trust Deed, you should tell them that you are in the process of proposing a Trust Deed, and they will be hearing from your IP shortly. Most creditors will then stop phoning you, and wait to receive your Trust Deed proposal.