Trust Deeds and IVAs

If you are still struggling to keep up repayments on credit cards and bills, a Trust Deed (in Scotland) or Individual Voluntary Agreement (in England) may be the answer. These are legally binding arrangements with the companies you owe money to. You make a monthly repayment, based on your income and expenditure. It is very similar to asking creditors to reduce payments but is done in a legal manner over a set period of time. Once this time has passed the debt will be written off.

In Scotland the legislation currently allows Trust Deeds to be discharged in three years, whereas in England this period is five years. The insolvency company which looks after your case will become in charge of all your financial assets, but protection is not guaranteed. You will only become protected if certain conditions are met and your creditors have agreed to the Trust Deed or IVA. In both cases your debts must have been significant to begin with – usually more than £10,000. Contact carringtondean.co.uk for more help and advice on this topic.

Bankruptcy

This isn’t something young people should be considering. It could affect job opportunities as some employers, especially financial companies, require information about your financial resources and verification that you have never been declared bankrupt. It currently takes three years in Scotland to be discharged from a bankruptcy agreement, whereas it is only one year in England.
Declaring yourself bankrupt will cancel all your debts but not your student loan. However, there are repercussions in terms of your entitlement to take out future loans, credit and a mortgage, which can last long after the initial bankruptcy period has ended.