The Length of Scottish Trust Deeds

A trust deed in Scotland lasts for at least four years.

The period of four years is a minimum legal requirement. You cannot usually get discharged sooner than this.

Your adviser will require you to provide information and documents. The faster you deal with this the sooner you can get your trust deed set up.

Once you’ve supplied the information your adviser can send proposals to your creditors. This could happen within a week if you and your adviser act quickly.

Your creditors have five weeks to assess and respond to your trust deed proposals.

If you receive enough support from your creditors, you’ll have a protected trust deed at the end of the five weeks period.

You may be asked to enter a trust deed that lasts longer than the minimum four years term.

This might be because you own an asset for which you’ll need to make extra payments. An extension is common for homeowners with equity and for owners of vehicles worth more than £3,000.

It could also be longer than four years because your creditors require extra payment in return for agreeing to your trust deed becoming protected.

Trust-Deed.co.uk Tip: If you’re quoted a trust deed lasting longer than four years get a second opinion. A different firm may offer you a shorter arrangement and get you out of debt sooner.

The length of a trust deed can be extended if you:

• Miss payments

• Don’t declare extra income

• Don’t declare reduced household bills

• Don’t declare a windfall

In these circumstances your trustee is obligated to collect in the extra money that should have been paid into your trust deed. An extended term is one way to recover this money.

When your protected trust deed begins it is registered on your credit file.

This record is removed from your credit report six years later.

When your trust deed begins your personal details get added to the Register of Insolvencies.

This record is removed from the Register of Insolvencies one year after your trustee discharges themselves.

Please note that your trustee’s discharge from the trust deed may not happen for several months after you have been personally discharged.

It’s technically possible to repay a trust deed early (before four years) but most people cannot afford to do so.

To legally qualify for discharge before the four years is completed you’ll need to pay (in total) all of the following:

1. The total amount of debt you owe

2. Interest on your debts

3. The fees and costs of your trustee

This is likely to add up to several thousand pounds more than you owed when your trust deed began.

In many instances of trust deeds getting paid off early it’s the result of someone receiving a lump sum. An early finish might also occur if you receive a large pay increase.

Trust deeds are a formal insolvency process so each party is legally bound by the agreement. You cannot easily choose to end your trust deed before it has been completed.

If you stop making your payments your trustee might decide to fail your trust deed. You’d then need to find a new way to deal with your debts.

Please note that your trustee may well not agree to simply fail your trust deed. They might choose to make you bankrupt or to arrange direct payment from your employer instead.

Once you’ve completed your part of the agreement (and at least four years have elapsed) you become eligible to be discharged from your trust deed.

There is no set timeframe for the discharge process. Your trustee might get this work done within a week or two, or it might take them longer.

Your discharge becomes official once it has been recorded on the Register of Insolvencies.

Your trustee can discharge themselves from your trust deed once they’ve completed the necessary administrative tasks.

These admin tasks can include confirming claims with creditors and making payments to them.

There is no set timeframe for your trustee’s discharge. It could occur a long time after your own discharge.

Mortgage lenders apply their own acceptance criteria to each of their mortgage products.

Most mortgage lenders include criteria about how long has elapsed since you were discharged from your Scottish trust deed.

These mortgage lending criteria change over time. At the time of writing there are very few mortgages available for people who have been discharged for less than two years. Some lenders will require you to have been discharged for three years or longer.

You’ll usually get discharged from bankruptcy in Scotland after one year. If you can afford to pay towards your debts these monthly payments will continue for a total of four years. If you qualified for the minimal assets process (MAP) route to bankruptcy your discharge can occur after just six months.

A Debt Payment Programme (DPP) under the Debt Arrangement Scheme (DAS) doesn’t come with a fixed timeline. It continues until your debts have been fully repaid and therefore could be longer or shorter than a trust deed.

An informal debt management plan doesn’t come with a fixed timeline. It also continues until your debts have been fully repaid and therefore could be longer or shorter than a trust deed.

Debt consolidation loans continue until the contractual repayments and any extra applicable charges have been repaid.