When your financial boat starts to sink and you are looking for available debt management solutions, one of the popular and most promising solutions you must have come across is IVA (Individual Voluntary Arrangements). If you did further research you would discover that the Scottish version of an IVA is trust deed and although both are possible solutions to a financial problem, it can be confusing whether it is the same thing or different options. Actually, the major difference between an IVA and a Trust Deed is that the former is a debt relief process for the English and the other is for the Scottish. Only English and Welsh residents are eligible for the IVA while the latter is available to the Scottish residents.
To qualify for an IVA, besides being either Welsh or English, one has to have a minimum of £15,000 in unsecured debts whereas the Scottish can seek Trust Deeds if they have a minimum of £10000 in debts. The other difference between the two is the duration. Whereas an IVA lasts for 60 months (5 years), a Trust Deed lasts for 48 months (4 years).
Similarities of Trust Deeds and IVAs
Trust Deeds and IVAs have a lot in common, and this is why most people confuse the two or just interchange the names. If you are familiar with the English IVA, you will get to know Scottish version, which is the Trust Deed. Here are the most notable similarities between the two debt management solutions:
i) To be eligible for either IVA or trust deed, you must owe money to 2 or more creditors.
ii) Your monthly income should be £150 or less.
iii) You must make payments based on affordability.
iv) Only unsecured debts can be put forward in a Trust Deed or IVA agreement. Secured debts will not be included.
v) For both, at the end of the term of arrangement, any unsecured debts will be written off completely and you can then start a fresh.
vi) Both of these solutions are best when you have a job to prevent you from being sequestered or being declared bankrupt.
vii) Even after an IVA or Trust Deed, you can still hold public office or act in the capacity of a company director.
viii) You will be required to declare all windfalls valued at over £200 including lottery wins, bonuses and inheritances.
ix) Both Trust Deeds and IVAs will be recorded on a public register.
x) These debt management solutions will negatively affect your credit recorded and will be recorded in your credit file.
Because IVAs and Trust Deeds are among the most effective debt management solutions, they have been used by hundreds of thousands of people to pay their debts off and start over a fresh. However, as appealing as they may be, these solutions are only right when the circumstances favors it and Insolvency Practitioners often advice that you weigh the pros and cons before deciding on a course of action.
Most people often overlook such helpful financial solutions because they believe bankruptcy is the ultimate path to starting a fresh. Further research will show you that despite the difference in names, the English IVA and the Scottish Trust Deed are the same thing, albeit with a few variations and that the Scottish Trust Deed has friendlier terms and can set one free of debts much sooner.