A trust deed is a voluntary agreement between you and the people you owe money to (also called your creditors). You agree to pay a regular amount of money towards your debts and at the end of a fixed time the rest of your debts will be written off.
All your belongings and property (your assets) are passed to someone who will look after your financial affairs. They are called your trustee. The trustee aims to pay your creditors as much as possible of the debt owed to them. This may involve some of your belongings or property being sold so that the money raised can be paid to your creditors.
A trust deed can become ‘protected’ if the majority of creditors are happy with the terms of the trust deed. This means that the trust deed is binding on all creditors and they cannot take any steps to recover the money owed to them.
If a trust deed is not ‘protected’ then it will not be binding on all of your creditors and they could still take action to recover the money you owe them.
A trust deed is only one of the options available to you if you have debt problems. You should get advice from a money adviser to help you decide what is the best option for you.
Trust Deeds are only available in Scotland.