I am in a considerable amount of debt with three credit cards and a personal loan and recently lost my job. I cannot meet the repayments and have been told that a Trust Deed would be the best option for me. Can you help?

Credit cards and personal loans are unsecured debts and are sometimes referred to as ‘non-priority’. Despite the title, it is important that we do not overlook these commitments, as the people we owe money to, sometimes known as our ‘creditors’, can take legal action against us to get their money back.

This includes going to court to seek a decree for payment, the record of which will remain on our credit file for six years.

It is important to remember that regardless of the situation, missed payments, formal debt solutions, and repayment plans can have an impact on our credit record and subsequently our ability to obtain affordable credit in the future.

Therefore, it is always best to reach out the people we owe money to in the first instance to investigate potential alternatives that may be available.

What support is available?

There are a variety of options that may be suitable for us if we are struggling with debts, and it is important that you discuss your situation with a suitably qualified money adviser.

There are several informal debt solutions available, including consolidation loans, token payments, and full and final settlements.

Trust Deeds – what are they?

Trust Deeds are one option for people with more than £5,000 of unsecured debt. A Trust Deed is a formal agreement between you and your Creditors utilising a third party, known as an ‘Insolvency Practitioner’ or ‘Trustee’ to administer and repay towards the debt.

This agreement is legally binding, with reduced payments, typically made over 4 years, at the end of which any unsecured debts are written off. ​This repayment is based on an amount that is affordable, and personal circumstances and regular expenditure are considered during the initial set up.

A Trust Deed can become ‘protected’ providing that most creditors agree to it and are satisfied with the terms of the agreement. This results in the agreement becoming binding on all creditors and they are then prevented from pursuing any form of action to recover the money owed to them.

At least half of the creditors need to accept the proposal for it to go ahead, or creditors representing at least two thirds of the total debt.

There are pros and cons to entering a Protected Trust Deed, and it is important to weigh up all the options available before deciding. If a creditor agrees, then the debt you owe them is ‘frozen’ at the start of the arrangement. If you keep to the terms of the Trust Deed, no further interest will be added to the debt, and after the agreed period, any remaining debt is written off.

Other solutions

There are other formal solutions that may be more appropriate, depending on your individual circumstances.

Advice Direct Scotland run, Scotland’s national debt advice service and provide free information and support on a wide-range of debt-related issues. Our specialist advisers can work with you to assess your current situation, look at your income and expenditure and decide what to do next.

You can call us on 0808 196 2316 (Monday to Friday, 9am-5pm). There is also a Knowledge Centre available on the website with information on a range of debt-related matters. You can visit for more information.