Can I get a loan with a trust deed?

You're not alone if you're in a trust deed and need a loan. Life doesn’t stop just because you're repaying debts. Can you borrow money while you’re in a trust deed? The short answer is yes in some cases—especially if your Insolvency Practitioner (IP) agrees.

What is a trust deed?

A trust deed is a legally binding agreement used in Scotland to help people who are struggling with debt. It is a form of personal insolvency, but it allows you to manage your debts in a structured, fair, and protective way. Here’s how it works:

You work with a licensed Insolvency Practitioner (IP) who reviews your finances.
Based on what you can realistically afford, you agree to pay a fixed amount each month—usually for 4 years.
During this time, legal action cannot affect you. Creditors can’t chase you, add interest, or take you to court.
At the end of the term, the trust deed legally writes off any remaining debt. That means you don’t have to pay it.

What debts can be included in a trust deed?

Most unsecured debts can be part of a trust deed, including:

Credit cards
Personal loans
Payday loans
Store cards
Overdrafts
Council tax arrears

Secured debts like mortgages or car finance are usually not included, but your IP will guide you.

How does a trust deed help?

Trust deeds give people breathing room. Instead of juggling payments and falling behind, you focus on one affordable monthly payment. It simplifies your life and helps you avoid bankruptcy while still addressing your debts.

What rules does a trust deed have?

While trust deeds offer protection and peace of mind, they also come with responsibilities:

You must stick to your payment plan.
You can’t take on more than £500 in credit without written permission from your IP.
Your spending may be reviewed regularly to make sure the deed stays fair for everyone involved.
Your credit rating will be affected, and the trust deed will be noted on your credit file for 6 years.

Why you must get permission to borrow

Taking on new debt while in a trust deed could damage the whole agreement. If you borrow without permission, your IP might:

Change your monthly payments
Extend the length of your trust deed
End the deed early, making all your debts active again

That's why it's important to talk to your IP before making any financial changes. This is especially true if you are thinking about borrowing more money.

A trust deed is more than a payment plan. It is a serious legal tool that can help you get out of debt, but only if you use it wisely.

Am I allowed to borrow money while in a trust deed?

Yes—but only if your IP agrees. They have to check whether:

You can afford the new repayments
It won’t risk your ability to finish the trust deed
The loan is for a valid, sensible reason

Most trust deeds have a rule: if you borrow more than £500, you must inform your IP. If you don’t ask for permission and your IP finds out, your trust deed could be affected or even fail. Always keep them in the loop.

What can go wrong if I borrow without permission?

It’s never worth hiding new loans from your IP. Doing so can lead to:

Your trust deed becoming invalid
Your creditors restarting legal action
Higher debt and more stress

Even if you think a loan is “just small,” always let your IP know. They’ll work with you to ensure that you manage any changes properly.

Will my trust deed show on my credit file if I borrow?

Yes. While you’re in a trust deed, it’s listed on your credit report. This means:

Lenders know you’ve had problems repaying debt before.
They’ll be extra cautious—if they agree to lend at all.
The trust deed stays on your file for 6 years from the start date, even after it ends.

So borrowing may not be easy or cheap, and it could hurt your score further if not handled well.

Can I get a loan during a trust deed?

Yes, you can. However, lenders will see you as a higher-risk borrower.

One option to consider is a secured loan. This type of loan uses your home as security, which helps reduce the lender’s risk. Because of this, you may have a better chance of being approved.

However, secured borrowing isn’t something to rush into. You must always think carefully before securing a loan against your home. Missing payments can put your home at risk. So, it’s vital to make sure the loan is affordable and fully approved by your IP.

What happens to my trust deed if I get a loan?

Your trust deed doesn’t stop working—but it may change slightly. Your IP will:

Review your income and outgoings again
Update your monthly payment plan if needed
Inform creditors if repayments affect available income

If the loan is approved, everything continues as normal—just with new numbers in your plan.

Will my credit be affected by borrowing more?

Yes, it could. Every new credit check shows up on your credit file, and any missed payments will hurt your score. Your trust deed already affects your credit, and borrowing may:

Lower your score further
Make it harder to get future credit
Delay your recovery if not managed carefully

That’s why any borrowing should be done cautiously, with your IP’s knowledge and support.

What should I do next if I want to borrow in a trust deed?

Speak to your IP first. Tell them what the loan is for and how much you need.
Gather your paperwork. Income, expenses, and details of your property—these will help lenders decide.
Speak to a trusted lender specialising in loans for people in complex situations and they will look at your case fairly.
Make a repayment plan. Work with your IP and the lender to build a plan that fits your budget.
Stay open and honest. If anything changes, update everyone involved.

Conclusion

You can borrow during a trust deed—but only carefully, only with help, and only if it truly helps. If the loan helps you handle a real emergency, it could be a good choice. Just make sure it fits within your trust deed agreement.

Central Trust specialises in offering secured loans to people with complex financial backgrounds—including those currently in trust deeds. Call us free on 0800 980 6273, or complete our enquiry form, and we will call you back at a convenient time.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON YOUR HOME, THE LENDER MAY REPOSSESS IT.