Is there a Scottish IVA?

In the UK alone, 57% of people are said to be struggling with debt with a significant amount of people feeling depressed, anxious or stressed by debt problems. There seems to be an abundance of debt solutions for people living in England, Wales and Northern Ireland. But what about Scotland?

In England people who are struggling with levels of debt which are £5000 or over can enter into an IVA. An IVA (or individual voluntary arrangement) is a straightforward solution to a very difficult problem. With an IVA, all of a person’s debt is consolidated into one monthly payment which is worked out on their affordability.

To work out a person’s affordability an insolvency practitioner will run through an income and expenditure with a client. This will take into account costs such as fuel, food, childcare, gas and electricity bills, rent/mortgage and other essential items. The remainder amount will then be used towards an IVA. If there is any remaining debt at the end of the IVA, it is agreed that the debt is written off in its entirety.

But what about in Scotland?

In Scotland, an IVA is not available but there is a similar solution. This similar solution is called a Scottish Trust Deed. A Scottish Trust Deed is a voluntary arrangement made with the creditors that you owe money to.

Rubbing out debt

A trust deed typically lasts for 4 years. In the 4 years all of the interest and charges on your debts will stop. You would make affordable monthly payments into the trust deed for 48 hours. Similarly to an IVA, any debt which remained at the end of the 4 years would be completely written off.

During an IVA, your creditors will deal directly with your trust deed company and not yourself. This is often a great relief for people, especially as the most common stressful factor people who are struggling with debt have is creditor harassment.

What are the risks of a Trust Deed?

Like anything which has great benefits, a trust deed comes with associated risks too. If you do not maintain the payments to your trust deed, there is a chance that your trust deed will fail. This could lead to bankruptcy or further creditor action. If you are a homeowner, your home could also be at risk if you failed to maintain payments into your trust deed.

If you have a perfect credit score, prepare for it to be obliterated when you enter into your debt plan! Creditors will see you as ultra high risk if you have chosen to write off huge portions of your debt. That being said, after your trust deed has completed your credit rating will slowly increase and creditors will then see you as less of a risk.

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