IVAs vs Scottish Trust Deeds
If you’ve come across the terms IVAs and Scottish Trust Deeds while hunting for solutions to your debt problem, you’re probably wondering what they both are and whether they could help with your current situation. You may even have done some research of your own on both IVAs and Scottish Trust Deeds and still have many unanswered questions about them.
Although both require very serious legally binding agreements between you and your creditors, they are very effective methods to avoiding bankruptcy and managing your debts. Here are a few more of the similarities between IVAs and Scottish Trust Deeds:
- You must have three or more creditors
- You must be employed or self-employed
- You must have £175 surplus income every month before debt payments
- The debt included must be unsecured debt only - so for example overdrafts, credit cards, storecards and loans
- Only an Insolvency Practitioner (IP) or debt counselor can make your application on your behalf
- They both freeze the interest, penalties and charges so your debts don’t increase and you have the chance to pay off the capital owed
- Any unpaid debt at the end of the agreement is written off and creditors cannot push you for repayment in the future
- Can be the last resort if your employment contract forbids bankruptcy
- You can still hold public office, keep your job or be a company director
- They both affect your credit rating
- The details are held on a public register, which can be searched by anyone although realistically only financial professionals use them.
- Both of them allow you to keep your home
So, in many ways they are very similar products, but the differences between them are what eventually dictate which one might be suitable for you and if you would qualify:
- IVAs can be undertaken by residents of England and Wales, while Scottish Trust Deeds only by residents of Scotland. You must be resident for six months before applying. Residents of Northern Ireland unfortunately have neither. Instead they have a court-controlled system for making arrangements with creditors.
- Scottish Trust Deeds last 60 months or 3 years, while IVAs last two years longer at 60 months or 5 years. However it is possible for both to be extended at the discretion of your IP if you have to undertake a payment holiday during the term due to an emergency.
- Scottish Trust Deeds have a minimum unsecured debt level of £10,000 while IVAs require £15,000.
- An IVA is automatically awarded ‘protected’ status on application, which means creditors cannot take action against you. Scottish Trust Deeds on the other hand must have ‘protected’ status applied for by your IP to stop your creditors from taking action. For some Scottish citizens this means there’s a chance that creditors could make them bankrupt if they do not agree with what is being proposed
There’s no way that IVAs and Scottish Trust Deeds could be regarded as quick fixes and they cannot be applied for by you – your financial suitability must be assessed by the services of a professional debt counselor or Insolvency Practitioner.
To find out if an IVA or Trust Deed is right for you, call 0800 987 5337 now and speak to one of our debt consultants. They’ll talk you through everything and help you decide if this type of debt management programme would be the right one for your circumstances.
To find out more about IVAs and whether they are right for you, call now and speak to one of our experienced IVA advisers now on 0800 987 5337
Example Unsecured Debts
|2||Credit card 1||£6,812|
|3||Credit card 2||£4,092|
|4||Credit card 3||£5,399|
|4||Credit card 4||£5,200|
Your Monthly Repayments Would Be
an IVA £748
(total contractual repayments)
an IVA £295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances. For more information on our fees click here