Trust deed or DAS?
A Debt Arrangement Scheme repays your debts in full with interest frozen. A trust deed can end with debts written off, but has fees and more risk. Here is a fair comparison.
A trust deed and a Debt Arrangement Scheme (DAS) are both formal Scottish ways to deal with debt through one affordable payment, but they end differently. DAS repays your debts in full, with interest, fees and charges frozen and then written off when you finish. A protected trust deed usually lasts 48 months and, if it completes successfully, the remaining debts included in it are written off, but it has fees and more risks.
This page sets them side by side so you can see the trade-offs. It does not recommend either. An adviser needs to look at your whole situation.
How do DAS and a trust deed work?
DAS is a Scottish scheme run by the Accountant in Bankruptcy (AiB), Scotland’s insolvency service. You repay your debts through a debt payment programme (DPP), at an amount worked out with the Common Financial Tool (the standard budget used in Scotland). You can only apply through a DAS approved money adviser. You pay a payments distributor, which pays your creditors. Once your programme is approved, creditors cannot use diligence against you (legal enforcement such as arrestments), serve a charge for payment (a formal demand to pay within a set time) or petition for your sequestration (bankruptcy in Scotland).
A trust deed is a legal agreement in which you pass your estate to a trustee, a licensed insolvency practitioner. You pay a monthly contribution, usually for 48 months, based on the Common Financial Tool. Once it becomes protected, it binds the creditors included in it, and any earnings arrestment (deductions from your wages to pay a debt) stops having effect. At the end, if you have kept to the terms and AiB registers your discharge, the remaining debts included are written off.
How do they compare side by side?
| Debt Arrangement Scheme | Protected trust deed | |
|---|---|---|
| Do you repay debts in full? | Yes | No. You pay what you can afford for a set period |
| Interest, fees and charges | Frozen from the date you apply and written off when you complete | Your debts are dealt with through the trust deed. Ask the trustee how interest is treated |
| What is written off | Frozen interest, fees and charges, on completion | The remaining debts included, on discharge, if you meet the conditions |
| How you apply | Through a DAS approved money adviser | Through a licensed insolvency practitioner, who becomes your trustee |
| Cost to set up | None. Money advisers cannot charge | Trustee fees and AiB fees, taken from your payments and assets |
| Running costs | Creditors cover them. Fees come out of your payments before they reach creditors, and you pay nothing extra | Trustee’s fixed fee, a percentage fee and outlays, plus AiB supervision of £120 a year |
| Minimum debt | None | £5,000 including interest |
| Couples | Joint programmes allowed if you both qualify | Each partner needs their own |
| How long | Not fixed. Debts must be repaid in a reasonable time. The average is about 6 years | Usually 48 months, longer in some cases |
| How creditors decide | 21 days to respond. Silence counts as consent. Approved automatically at 90% by value, otherwise AiB decides if it is fair and reasonable | Protected unless a majority in number or at least one third in value object within 5 weeks |
| Your home and assets | You do not have to sell your home or car, or use your savings | Homeowners may need to release equity |
| Credit rating | On your credit file for at least 6 years | Affected for 6 years from the date it begins |
| Public register | DAS Register, which does not show your debts | Register of Insolvencies, removed 12 months after it ends |
| If you cannot keep up | Payment breaks are possible. AiB can revoke after 3 missed payments | If it fails, creditors can pursue you and the trustee can petition for your sequestration |
What does each one cost?
DAS is free to set up: a money adviser cannot charge you for arranging a debt payment programme. The costs of running it are covered by your creditors. In practice, a 2% fee to AiB as DAS Administrator and a 20% fee to the payments distributor come out of each payment before it reaches your creditors, so creditors receive 78% of what you pay. You do not pay anything on top.
A trust deed has fees. By law, the trustee’s fees can only be a fixed fee, a percentage of the money and assets collected, and outlays. They must be disclosed before you sign. AiB also charges statutory fees, including £40 to register the trust deed as protected and £120 for each year of supervision. There is no legal cap on trustee fees, although creditors and AiB can challenge them. All of these costs come out of your payments and assets before your creditors are paid. See what a trust deed costs.
Key fact. Being free to set up does not mean DAS always costs you less overall. It repays your debts in full, so the total you pay can be higher than in a trust deed. Compare the total, not just the fees.
What happens to your home and your debts?
Your home and belongings
In DAS, you do not have to sell your home or your car, or use your savings, to pay your debts. Ongoing payments, such as your mortgage, are not included, so you keep paying them as normal.
In a trust deed, the trustee has a right to the equity in your home (its value after the mortgage). The trustee may agree not to sell in return for a lump sum or extra monthly payments, which can run after the 48 months. Where there is little or no equity, the home may be left out if the mortgage lender agrees. A car needed for work or family reasons can often be kept, depending on its value and the trustee. See your home and a trust deed.
Which debts can go in?
DAS cannot include student loans, hire purchase or conditional sale agreements (though arrears on them can go in), court fines, or ongoing payments.
A trust deed does not write off student loans, fines, debts from fraud, aliment (financial support for a child or former partner) or secured debt, and it cannot include ongoing payments such as current council tax, child maintenance and mortgage payments. See which debts can go into a trust deed.
Who might each one suit?
This is general information, not a recommendation. In broad terms, DAS is designed for people who can repay what they owe in a reasonable time if interest and charges stop. It can suit people who want to keep their home and savings, who have a smaller amount of debt (there is no minimum), or who want a joint programme with a partner.
A trust deed needs debts of at least £5,000, and it can only become protected where your contributions over the payment period would not repay your debts in full. If it completes successfully, the remaining debts included are written off, but it has fees, homeowners may need to release equity, and your name goes on the public Register of Insolvencies. Weigh this up with the pros and cons of a trust deed.
Want to compare your own figures? Tell us a little about your situation and a licensed insolvency practitioner firm will call you to go through every option, including ones that are not a trust deed.
May not be suitable in all circumstances. Fees apply. Your credit rating may be affected. Free, impartial advice is available from MoneyHelper and other services.
What if you cannot keep up the payments?
In DAS, if your disposable income falls by 50% or more, you can ask for a payment break of up to 6 months, and your programme is extended by the length of the break. Short crisis breaks are also possible. If you miss 3 payments, AiB can revoke your programme, and creditors can then add interest back 14 days after revocation.
In a trust deed, your contribution is reviewed at least once a year and can change if your income does. If the trust deed fails, creditors can start asking for payment again and may add fees, and your trustee can petition for your sequestration (bankruptcy in Scotland).
What else could you consider?
DAS and a trust deed are not the only options. Sequestration, the Minimal Asset Process, a debt management plan and a six-month moratorium on diligence may also be worth knowing about, depending on your circumstances. Free, impartial advice is available from free debt advice services, and a money adviser can set up a DAS for you at no cost.
Official sources
Common questions
Is DAS cheaper than a trust deed?
It costs you nothing to set up a DAS, because money advisers cannot charge for it, and creditors cover the costs of running your payment programme. A trust deed has a trustee's fixed fee, a percentage fee, outlays and statutory fees, all taken from your payments and assets. But because DAS repays everything, you may pay back more in total. Compare the total you would pay under each.
Can I switch from a DAS to a trust deed?
You cannot be in both at once, because people in a protected trust deed cannot apply for DAS. If a DAS stops being affordable, speak to your money adviser first. They can look at whether a payment break would help, or at other options such as a trust deed or sequestration. Bear in mind that creditors can add interest back 14 days after a programme is revoked.
Does DAS write off any debt?
DAS does not write off the money you borrowed. You repay the debts included in full. What it does write off is the interest, fees and charges that are frozen from the date you apply, once you complete the programme. If you do not complete it, creditors can add interest back. That is the main difference from a protected trust deed.
Can creditors refuse a DAS or a trust deed?
Both involve creditors. In DAS, creditors are asked to agree and silence counts as consent. If creditors owed at least 90% by value agree, it is approved automatically, and otherwise AiB can still approve it if it is fair and reasonable. A trust deed becomes protected unless a majority of creditors by number, or those owed at least a third by value, object.
Related guides
- The Debt Arrangement Scheme (DAS) Repay your debts in full through one payment, with interest and charges frozen.
- Trust deed pros and cons The advantages and disadvantages of a trust deed, set out side by side.
- What a trust deed costs How trustee and AiB fees are set, paid and checked, and what to ask about them.
- Trust deed or sequestration? A protected trust deed and bankruptcy in Scotland compared side by side.