Quite obviously, debt is not a predicament that people in England have to deal with exclusively. Serious debt affects people the world over; however, the way in which different countries tackle personal debt does differ. The IVA is commonly known as England’s solution for coping with large debt volumes, however in Scotland for example; they use what is known as a Trust Deed.

What is a Trust Deed?

A Trust Deed performs more or less the same function as an IVA. As with an IVA, a Trust Deed is a legally binding agreement which offers a persons creditors an alternative to them declaring bankruptcy. It allows a person who is heavily indebted to make an offer to their creditors, which is accepted on the basis that it is the maximum amount they can afford to pay back each month for an allotted period.

An IVA usually lasts for duration of 5 years, however Trust Deeds typically end after 3 years. A person can only apply for a Trust Deed if it can be proved that their disposable income is less than that needed to repay their creditor commitments.

Trust Deeds are regulated by the Scottish Bankruptcy Act of 1985 and are viewed as an “informal bankruptcy”, again similar to the IVA. The application can also enter into protected status if all relevant criteria are met. Once the Deed is protected, creditors are unable to pursue any type of legal action and must freeze any further interest and charges.

The Trustee throughout the life of the Trust Deed will be your Insolvency Practitioner. It is also important to realise that Trust Deeds are only available to Scottish citizens.