Often people are confused about the differences between a Scottish trust deed and an Individual Voluntary Agreement.
While there may be several similarities between the two agreements, a Trust deed is not an IVA.
For your better understanding, I have compiled this complete guide. It will help you understand which agreement could be the best solution for your debt problems.
What is an IVA?
IVA is an Individual Voluntary Agreement that is made between you and your creditors. This a formal and legal arrangement made so that you can pay off your unsecured debt.
However, unlike a Scottish trust deed, an IVA is flexible.
What is the difference between a trust deed and an IVA?
The main difference is that an IVA is only available for English, Welsh, and people from Northern Ireland. However, trust deeds are only available for Scottish residents.
Moreover, in a trust deed you require a minimum debt level of £5,000. However, in an IVA you are expected to have at least £6,000 of unsecured debts.
Furthermore, the estimated duration for an IVA is sixty months or 5 years. However, a trust deed could last up to forty eight months or 4 years.
In case you have been living in Scotland for at least 12 months, you could easily avail a trust deed.
Your insolvency practitioners could help you understand which agreement is better for you.
What are the similarities between an IVA and a trust deed?
There are a number of similarities between an IVA and a Trust Deed.
- Both of them are debt relief agreements designed to help people in the UK to pay off their unwanted debts.
- In both cases, you should owe money to one or more creditors.
- Your monthly payments are based on your ability to pay. This is an amount decided after evaluating your financial situation and deducting your disposable income.
- Only unsecured debts can be a part of your debt relief agreement.
- Once you get into the agreement, interest and charges will be frozen.
- After your payments are complete, in both cases, your remaining unpaid debts will be written off.
- IVA and trust deeds are an alternate to sequestration.
- Neither of the agreements can have an impact on your ability to be a part of a public office or own a company.
- In case of a windfall, the amount of money must be declared. Your trustee must be informed about it.
- Both are recorded in the Public register of Insolvency. Credit reference agencies could make this information available to anyone.
- Your insolvency information is recorded by authorized and regulated organizations.
- Your credit card can be included in the debt arrangement scheme.
- Both can have an affect on your credit rating.
- Your trust deed will appear in your credit file.
- You will be expected to visit a licensed insolvency practitioner to make the agreement.
How much monthly income do I need to have for an IVA and a trust deed?
For both cases the agreement is made on your ability to make payments easily. However, you are expected to have a monthly income for more than £150.
I would advise you speak to your trustee since it could be different for each debt solution.
Will our records be published publicly?
Regardless of which agreement you choose, your records could be published in the public register of insolvencies. This means your creditors could easily get your information.
An IVA is mostly listed in the London or Belfast Gazette. However, a trust deed is listed in the Edinburgh Gazette.
Do I need to transfer my assets in an IVA?
Once a IVA is made, you have to transfer your assets to your trustee. Since your trustee will be managing your money, you will be protected from any legal action and pursuit from your creditors.
However, in a trust deed, you need to apply separately to make your transfer your agreement to a protected trust deed.
Frequently Asked Questions (FAQs)
Is trust deed an IVA?
IVA is a legally binding agreement between you and your creditor. It is also known as an English Debt relief process. It can only be accessed by individuals who reside in England, Wales, and Northern Ireland.
However, a trust deed is a Scottish debt relief process, which is available for Scottish residents.
What is an Individual Insolvency Register?
An Individual Insolvency Register is a public record regulated by a financial conduct authority. This holds records of all Individual Voluntary Agreements and Bankruptcies.
While IVAs and trust deeds might seem similar, there is still a significant difference between the two.
However, both of them pose to be effective debt solutions.
Read the guidelines provided carefully. You will be able to have a better understanding of the similarities and differences between the two.
I would advise you to speak to your trustee to understand which debt solution could be the best for you. However, it is important to understand your place of residence could affect your debt solution. If you live in Scotland, your trustee could suggest a trust deed.
Feel free to contact us if you think we have missed out on anything you would further like to know.