An IVA (Individual Voluntary Arrangement) may be the best option if you have over £15,000 of
unsecured debts and are struggling to cope to such an extent that you cannot afford your monthly
repayments but want to avoid bankruptcy.
An IVA is a legally binding contract between you and your creditors and generally means that you are
likely to be free from unsecured debt within five years. As your creditors can legally write off up to 75%
of your debt, you could end up paying back less, sometimes much less, than you actually owe.
A Trust Deed is similar to an IVA but governed by Scottish law. A Trust Deed may be a good option if
you have more than £10,000 of unsecured debt and you’re a resident in Scotland.
Generally, debt management is suited to those with fairly low levels of debt, usually below £15,000.
It offers a short term solution for people needing some time to get back on their feet or those struggling
to manage their debt appropriately.
Unlike an IVA or Trust Deed, it does not involve a legally binding contract. In fact it is an
informal agreement that will be arranged on your behalf with your creditors to reduce your monthly payments.
Normally you are still obliged to pay your debt in full, so reducing your monthly payments may increase
your length of repayment. However the reduction in your expenditure should help you take better control of
your finances."
