Benefits of Protected Trust Deed or PTD:
(Scotland only: Based on Scottish Law)
The unpaid balance of your debts is written off
One affordable monthly payment - usually for 3 years
Protects you from further action by your creditors
Creditors are legally bound by the terms of the agreement
Real alternative to declaring yourself Bankrupt
A Trust Deed is a solution to debt and a real alternative to Bankruptcy. Basically it is an arrangement between you and your creditors, usually over three years. At the end of a Trust Deed the balance of any unpaid debts is written off.
Under legislation, once protected, a Trust Deed is legally binding on all your unsecured creditors. The terms of your Trust Deed are tailored to your own personal circumstances.
If your creditors do not object, the Trust Deed will become protected - that means your creditors are prevented from taking any further action as long as you keep to the agreement, and you'll be debt free normally in 36 months.
Benefits of an Individual Voluntary Agreement or IVA:
The unpaid balance of your debts is written off
One affordable monthly payment - usually for five years
Protects you from further action by your creditors
Creditors are legally bound by the terms of the agreement
Real alternative to declaring yourself Bankrupt
Avoid public notices affecting your reputation
Anyone can fall into debt and more people than you might think are seriously in debt. Loss of income due to redundancy, a cut in workload or a failing business, divorce, illness, starting a family or simply over commitment can all make debts get out of control.
An Individual Voluntary Arrangement (IVA) could be your best solution if you or your partner are in full time employment and have unsecured debt over £15,000.
You agree to make a fixed monthly payment for a set period of time, usually 5 years, and at the end of that period the remaining balance is written off.
A licensed Insolvency Practitioner can negotiate a legally binding agreement between you and your creditors.
As long as you continue to pay the agreed amount each month you’ll be protected from any further action being taken against you by your creditors. Interest and charges will normally be frozen. Your credit rating will be affected but, if you are already falling behind with payments, this will already have happened.
To approve your IVA, at least 75 per cent (by debt value) of the creditors who vote at a meeting must accept your proposals. Even if they don’t vote, or they vote against your proposals, each of your creditors will be bound by the agreement as long as it has been accepted by this majority.
The amount that you are asked to pay into your IVA will be the disposable income remaining after paying for monthly living costs and secured debt commitments. So the payment will be based on the amount you have left over after making allowances for all the day to day living expenses of you and your family. Your creditors will usually require that these payments are maintained for five years.
Your licensed insolvency practitioner will be in regular contact with you to make sure you’re able to meet your monthly payments. If you find that you are unable to meet your payments, they will try to renegotiate the terms of the agreement with your creditors.
In accepting an IVA, your creditors will expect to get a better return than they would from any other reasonable alternative, and your payment proposals should demonstrate this to be the case. Your creditors will also benefit from the fact that your IVA will be monitored.
As long as the terms of the proposals have been fully performed, the creditors who were included in the agreement will have no further claim against you and the balance of any unpaid debts is written off.
One of the main benefits of an IVA as a solution over bankruptcy is that the family home will not be repossessed. If you are a homeowner, there is a possibility, you will be asked to release part of the equity in your home to pay towards the arrangement
All the costs associated with an IVA are usually included in the payments you make into it.
Your licensed insolvency practitioner will fully inform you of the proposed fees before you enter into an IVA.
Insolvency practitioners are licensed by either the Insolvency Service which is part of the DTI (Department of Trade and Industry) or the ICAEW (Institute of Chartered Accountants in England and Wales).
All licensing and professional bodies provide technical, professional and ethical guidelines that have to be followed carefully.
For more information about Insolvency Services visit www.insolvency.gov.uk
For more information on this subject type in IVA Providers in the search box at the top or the bottom of this page and click on any of the companies listed at the top of the search.
