What is a Protected Trust Deed or IVA in Scotland?
What is a Protected Trust Deed or IVA in Scotland
?
An IVA in Scotland does not exist as such as it is replaced in Scotland only by the Scottish equivalent, the Protected Trust Deed. A Protected Trust Deed can allow an individual to write off up to 90% of the unsecured debt that they owe.
The Protected Trust Deed normally lasts for a typical period of 36 months.
In order to qualify for a Protected Trust Deed in Scotland an individual would typically owe at least 10,000GBP to unsecured debts such as high street store cards, credit cards and unsecured loans.
What does the term Unsecured debt mean?
Unsecured means that the debt is not secured against an asset such as a car or house. Consolidation loans for example are normally secured against assets, so if you default on the arrangement then the creditor can make a claim against the asset, usually a home.
Do Protected Trust Deeds really use Government legislation?
Yes. In order for the Trust Deed to become a Protected Trust Deed, according to the official Government legislation, the latest version being The Protected Trust Deeds (Scotland) Regulations 2008, then the various conditions of the act must be met in order to process a Trust Deed application. An insolvency practitioner is the only person who can administer the act for obvious reasons.
Most noticeable, in order for a Trust Deed to gain a Protected status, of your creditors two thirds of the overall debt value must agree to the repayment proposal and your insolvency practitioner must explain the act in great details.
Can I really write off up to 90% of my debt with a Protected Trust Deed?
The simple answer is yes, it is possible to write off up to 90% of your debt but it is rare to write off this much. The actual write off value depends on your own circumstances. Loosely speaking, here is how it works:
You subtract your expenditure from your income to form your disposable income as it is known. This disposable income is what is used to repay your creditors.
If you pay 225GBP for 36 months towards your debt then you would have repaid 8,100GBP after the typical period. If the overall debt owed is 25,000GBP then you would have written off 68% of your debt in this instance.
There are negatives also associated to committing to a Protected Trust Deed, e.g. If you have outstanding equity in your property or savings then you would be required to release this to your creditors in order to pay off some of the debt. You are also forbidden from attaining credit while on a Trust Deed and even three years after your Trust Deed has ended, you may struggle to get credit. Bear in mind, there are steps that you can take to repair your credit rating.
The Protected Trust Deed is a viable option to use when you are looking to clear debts and you live in Scotland, however, it doesn't suit everyone and there are other options available. You can speak to a qualified money advisor free of charge to discuss if a Protected Trust Deed is a good option for you.
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