IVA in Scotland
Summary: IVA in Scotland - This article outlines the similarities and differences between Individual Voluntary Agreements (IVA), currently available in England, Wales and Northern Ireland, and Trust Deeds, which are the Scottish equivalent.
Individual Voluntary Agreements (IVAs) were introduced in 1986 as a means to help small companies struggling with debt. Over the years, they have evolved to help individuals with personal debt. Now, anyone with at least £12,000 of unsecured debt may apply for an IVA and if it is approved by the creditors, will allow them to repay a single affordable monthly payment, usually for 5 years, after which time the debt is cleared. IVAs are currently available in England, Wales and Northern Ireland. They are not, however, available in Scotland.
Instead of IVAs, in Scotland there are Trust Deeds. These are, in effect, the same as an IVA, but with a few differences. It is also usual that the Insolvency Practitioner (IP) that negotiates the IVA will also reside in Scotland.
As with an IVA, the process of application is very similar, with an IP working on behalf of the debtor to negotiate a fixed monthly payment with the creditors. As with an IVA, there must usually be at least 3 lines of credit, spread between 2 or more different creditors. In order for the Trust Deed to be agreed, the creditors of at least 75% of the value of the debt must agree to the terms. Should the Trust Deed fail for any reason, then the creditors could petition for Bankruptcy (or Sequestration as it is referred to in Scotland).
Amount of eligible debt - To apply for an IVA, the individual is generally required to have no less than £12,000 of unsecured debt. A Trust Deed usually only requires the applicant to have no less than £10,000 of unsecured debt.
Length of agreement - An IVA usually lasts for a period of 5 years, whereas a Trust Deed is usually completed in 3 years.
Homeowners - As with an IVA, those entering a Trust Deed will generally not have to sell their home, however it is more likely that the individual in a Trust Deed will be required to release equity in their property to repay some of the debt.