Insolvency Services

Individual Voluntary Agreement (IVA)

An IVA is a legally binding agreement between an individual and his/her creditors for the repayment of unsecured debt. It is an alternative to bankruptcy.

The agreement provides for:

  • A monthly payment, based on affordable disposable income, to be made and/or a lump sum payment in lieu of any equity in the home
  • Writing off up to 75% of your debt (subject to your circumstances)
  • Debt to be repaid over a period, normally 5 years
  • The freezing of interest and charges on all debt

What are the advantages:

  • Avoids the stigma and publicity that can be associated with bankruptcy
  • Avoids the restrictions imposed on bankrupts (e.g. the holding of certain public offices, an officeholder in relation to a pension fund or charity and company director)
  • Can Safeguard against problems with employers (certain occupations only e.g. police officers, prison officers)
  • Provides you with a say in how assets are introduced into the arrangement allowing you to remain in control
  • Creditors who vote to reject the agreement are still bound by it providing they do not represent more than 25% of all voting creditors
  • The costs are likely to be lower than bankruptcy resulting in increased payments to creditors
  • Credit reference agencies generally consider a successfully concluded IVA more favorably than bankruptcy making it easier to obtain credit after the 5 years

What are the disadvantages:

  • Not usually suitable if debts are less than £15,000
  • 75% of creditors voting in relation to the agreement must vote in favour i.e. the IVA can fail at first instance
  • Usually lasts for 5 years
  • Default under the agreement is likely to result in your bankruptcy
  • Unable to obtain credit for the duration of the IVA, normally 5 years. This restriction will only last for 12 months in bankruptcy but in reality your credit rating will be affected for longer than this as you will need to rebuild your credit rating

To speak to an advisor, free of charge and without obligation, contact us via the enquiry form or call us on 0800 634 0015

Trust Deed (only in Scotland)

The Trust Deed is a legally binding and formal arrangement between an individual and his/her creditors to repay a percentage of their total debts over a fixed 36 month period.

The Trust Deed has no Court involvement and was introduced as an alternative to formal bankruptcy which, to some, can have severe consequences. It is regulated by a qualified Insolvency Practitioner who deals with creditors on their behalf.

What are the advantages:

  • There is no court involvement and the Trust Deed includes all unsecured debts including Council Tax
  • The Trust Deed has the effect of freezing interest and charges for all debts
  • The monthly payment is agreed between you and the Trustee. It is never based on a percentage of income or percentage of total debt
  • There are no set up fees or costs involved. The Trustee is paid by the agreement of the creditors
  • The vast majority of Trust Deeds are accepted by creditors. Current statistics show a failure rate of less than 2%
  • Once the period of the Trust Deed has been completed and all payments received, it is brought to a timely close
  • On completing the Trust Deed, creditors are unable to legally pursue you for any remaining balance of debt
  • The Trust Deed normally safeguards your home. Where equity exists this is required to be released in full by remortgaging. The Trustee can arrange this and it does not involve the sale of the house

What are the disadvantages:

  • The Trust Deed may affect your credit rating
  • You are unable to Act as a Company Director
  • Like your Creditors, you are legally bound by the terms of the Trust Deed
  • Assets such as shares, policies etc are required to be sold for the benefit of your creditors

To speak to an advisor, free of charge and without obligation, contact us via the enquiry form or call us on 0800 634 0015.

Debt Management

A Debt Management Plan is a plan tailored to solve your debt problems. It involves working closely with you to reach an agreement on how much you can afford to pay each month which will then be distributed to your creditors. Our case handlers will act on your behalf and liaise with your creditors to negotiate sensible repayment terms which are suitable for both parties.

Creditors receive dividend payments on a monthly basis from the funds received from you, which in the short term will relieve the pressure you are feeling from your creditors and over the longer term aim to clear all your outstanding unsecured credit. This can be a lengthy process lasting several years, depending on the level of your liabilities and income; however during your plan we will review your financial affairs on a regular basis to ensure that the best possible proposal is being put forward to your creditors and that your liabilities are settled at the earliest opportunity.

What are the advantages:

  • You no longer have to deal direct with all your creditors
  • Interest and charges are often frozen, so the debt doesn’t increase
  • You pay one monthly payment to Brightside who distribute your payment on a pro–rata basis to your creditors
  • You only pay what you can afford, based on a comprehensive review of your income and expenditure

What are the disadvantages:

  • Creditors do not have to agree to repayment schedules
  • It is not legally binding so creditors can still proceed to chase you for contractual payments or court action (Brightside will support you through this if required)
  • If you only have a small surplus income and a large debt, it will take several years to clear your liabilities as all your debt has to be repaid

To speak to an advisor, free of charge and without obligation, contact us via the enquiry form or call us on 0800 634 0015.