IVA / Trust Deed: what’s the difference?

1 August 2008

If you have found yourself in serious amounts of debt, or know someone else who has, you may be familiar with the terms IVA (Individual Voluntary Arrangement) and Trust Deed. Both are ways of getting yourself out of unmanageable debt, but there are fundamental differences between the two – the most important being that one applies to England and Wales, and the other applies to Scotland.

IVA (Individual Voluntary Arrangement)
An IVA is:

• Only available to residents of England & Wales
• Usually only available to people with debts of at least £15,000
• Normally in force for five years

Trust Deed
A Trust Deed is:

• The Scottish equivalent to an IVA
• Usually only available to people with debts of at least £10,000
• Normally in force for only three years

Similarities between the two
Despite the differences, IVAs and Trust Deeds essentially do the same thing. Both allow you to pay back a portion of your debt, after which the rest is considered settled. There are also several rules that apply to both:

• You must owe money to three or more creditors to qualify
• You must have a monthly disposable income, normally £200+
• Both take place in the form of regular monthly payments
• Both usually involve a freeze on interest and other charges
• Both are regarded as a way of avoiding bankruptcy/sequestration – benefiting both debtor and creditor (the creditor gets more money back than they normally would through bankruptcy, and the debtor can usually keep the valuable assets they may lose through bankruptcy – e.g. their home and car.)

IVAs and Trust Deeds are invaluable debt solutions that have helped hundreds of thousands of people with debt problems. However, before you make any decisions about how to get out of debt, it’s essential you seek expert advice from a professional debt adviser. They will help you decide which debt solutions are best suited to your own situation.

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