What are the disadvantages of a Trust Deed?


As well as having a number of significant benefits, such discharging you from your liabilities after four years (typically), Trust Deeds also have a number of disadvantages that you need to be aware of before deciding to go ahead with one.

  • You will be required to release any equity in your property, which could include selling your home if you are unable to remortgage.
  • Any diligence (debt enforcement) that has already commenced to recover the debts, such as wages or bank account arrestment, will not be stopped by the Trust Deed.
  • Your credit rating will be affected by entering to a Trust Deed.
  • If you fail to maintain the payments according to the terms of the trust deed the result may be bankruptcy.
  • Details are published in the Edinburgh Gazette and added to the Register of Insolvencies.
  • You cannot acquire further credit over £250 until the Trust Deed has been discharged.
  • You cannot be a Director of a Limited Company.
  • Even if your Trust Deed has been granted protected status, your Trustee (or your creditors) can still petition for your sequestration if they can prove it is more beneficial to your creditors).

Debt Advice Foundation is a registered UK charity offering free, confidential debt advice. If you need advice about Scottish Trust Deeds or would like to see if you qualify, please call the charity’s helpline to speak with a Advisor on 0800 043 40 50.