DebtOptions.co.uk directors have over 11 years experience helping people with all aspects of debt management, including arranging an IVA.
Many people facing serious debt are not aware of all of the legal debt management options that could provide a managed route out of a debt crisis. This guide gives some insights into IVA’s, Scottish Trust Deeds, bankruptcy and how they compare.
1. An IVA
An IVA is a contractual agreement between you and whoever you owe money to – your ‘creditors’. You agree that you will pay a certain fixed amount each month towards repaying your debts, over 5 or more years. You are usually represented by a Licensed Insolvency Practitioner (IP) who should create a manageable repayment schedule with you. Your IP will deal with the creditors and the formalities involved on your behalf. If you comply with the terms of the IVA, the debts covered are written off at the end.
2. Trust Deeds
This is one debt management solution for people resident in Scotland. A ‘Trustee’ is appointed to negotiate on your behalf, control your assets and formally supervise the process. Trust Deeds also create a manageable repayment plan typically over 3 years and again, if you complete one successfully, it writes off the debts it covered.
3. Bankruptcy
Bankruptcy means the Official Receiver or an IP will take control of your assets to contribute towards debt repayment. You may need to contribute periodic repayments during the lifespan of the order. Typically, first-time bankruptcies end in ‘discharge’ after 12 months, meaning you are no longer liable for any debts it applied to.
Some Key Differences
1. An IVA is commonly used for debts totalling £15,000 or more which are owed to 3 creditors or more.
2. There is no minimum amount of debt a Trust Deed could apply to – each case is considered individually.
3. Bankruptcy details are published in the local press and may affect your professional status. This is not the case for an IVA or Trust Deeds.
4. Bankruptcy places a number of strict legal restrictions upon the applicant, including prohibiting them from holding certain public offices and being a company director. These do not apply for an IVA or Trust Deeds.
This brief overview of some key facts can help you before going on to gain essential independent professional advice on each of these debt management solutions, including which would be the best for your circumstances.
