Trust Deed – Alternative To An IVA in Scotland
 
If you are resident in Scotland it isn't possible to do an IVA. The relevant alternative for residents of Scotland is known as a protected trust deed (or also sometimes a Scottish trust deed). Other specialist options also exist, including the Scottish Debt Arrangement Scheme

There are some significant differences between a trust deed in Scotland and an individual voluntary arrangement elsewhere in the UK.

One major difference is the term of an arrangement. Trust deeds in Scotland typically are set up for a thirty six month term, though in some circumstances it may be proposed that a longer trust deed term than this is used. An IVA usually runs for a longer period of sixty months.

It may be possible to commence with a Scottish trust deed with debts below the threshold usually required for an IVA. Scottish insolvency practitioners differ in their acceptance criteria, but it may be possible to achieve a protected trust deed with debts of £8000 or more.

There is no minimum number of creditors required for a trust deed in Scotland to be attempted.

As with an IVA, a trust deed in Scotland will result in interest and other charges ceasing to be levied.

Also in common with an IVA, support from creditors is required for the trust deed to be set up and become a protected trust deed. An IVA requires the support of 75% of creditors. A trust deed requires that no more than a third of the creditors (by value) or half of creditors (by number) object to it becoming a protected trust deed.

Homeowners in Scotland do not currently receive the same level of protection via a Scottish trust deed that is achieved using an IVA. If you have equity in your home it will be required that you pay over a sum equivalent to this amount as part of your trust deed commitments. Raising such a sum can be difficult for some people, who therefore might prefer to consider the unique Scottish Debt Arrangement Scheme instead.

Unlike a trust deed in Scotland, the Debt Arrangement Scheme does not take your home into account. It has more in common with a debt management plan, but provides superior levels of legal protection from creditors and the guaranteed cessation of interest.

For those who cannot afford to contribute to a Scottish trust deed or a Debt Arrangement Scheme, bankruptcy might be an alternative. Bankruptcy in Scotland is also known as “sequestration”. As with bankruptcy elsewhere in the UK, you'll usually be discharged after a year and you'll be expected to contribute towards your debts for a period of three years if you can afford to.

If you have a question about any of these options you may wish to visit the trust deed forum at Trust-Deed.co.uk where experts can answer your questions online.

Do you qualify for an IVA?

For more information see:
What is an IVA?




 
 
     

 

 
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