IVA vs Scottish Trust Deed - Key Differences Explained

IVA vs Scottish Trust Deed - What's the Difference?

If you're researching debt solutions in the UK, you've likely encountered both Individual Voluntary Arrangements (IVAs) and Trust Deeds (also called Protected Trust Deeds or PTDs). These are similar formal debt solutions, but there's one crucial difference: geography.

  • IVA: England, Wales, and Northern Ireland
  • Trust Deed: Scotland only

While they serve the same purpose - a formal agreement to repay debts over time with the remainder written off - the legal frameworks differ significantly.

Quick Comparison Table

Feature IVA (England/Wales/NI) Trust Deed (Scotland)
Availability England, Wales, Northern Ireland Scotland only
Legal Framework Insolvency Act 1986 Bankruptcy (Scotland) Act 2016
Minimum Debt £6,000+ (unofficial) £5,000+ (unofficial)
Duration 60 months (5 years) 48 months (4 years)
Creditor Approval 75% by value All creditors (protected status)
Failed Protection 75% majority still binds Automatic if criteria met
Practitioner Title Insolvency Practitioner (IP) Trustee
Fee Structure Nominee + supervisor fees Trustee fees (similar %)
Payment Review Annual reviews Regular reviews
Public Register Individual Insolvency Register Register of Insolvencies (ROI)
Equity Release Year 5 Year 4
Credit Impact 6 years 6 years

Geographic Eligibility

Where You Must Live

For an IVA:

  • Permanently resident in England, Wales, or Northern Ireland
  • Must have lived there for at least 6 months
  • Court jurisdiction: England and Wales

For a Trust Deed:

  • Permanently resident in Scotland
  • Scottish legal jurisdiction applies
  • Cannot be used elsewhere in UK

What if I move?

Scotland to England during agreement:

  • Trust Deed continues under Scottish law
  • Remains valid
  • Completed in Scotland even if you've moved

England to Scotland during IVA:

  • IVA continues under English law
  • Remains valid
  • Managed from England

Northern Ireland Special Case

Northern Ireland residents can use:

  • ✅ IVA (England and Wales insolvency law applies)
  • ❌ Not Trust Deed
  • Alternative: Debt Relief Order (Northern Ireland version)

Duration Difference - 4 Years vs 5 Years

Standard Terms

Trust Deed: 48 months (4 years)

  • Shorter standard term
  • Year 4: Equity release review
  • Completion typically month 48

IVA: 60 months (5 years)

  • Longer standard term
  • Year 5: Equity release review
  • Completion typically month 60

IVA extension to 72 months:

  • If can't release equity
  • Becomes 6 years total

Trust Deed extension to 60 months:

  • If can't release equity
  • Becomes 5 years total

Total Payment Comparison

Example: £500/month payment

Solution Standard Term Extended (no equity) Total Paid Standard Total Paid Extended
Trust Deed 48 months 60 months £24,000 £30,000
IVA 60 months 72 months £30,000 £36,000

Implication: Trust Deed = pay £6,000 less over standard term

Creditor Approval Process

IVA Approval (England/Wales)

Requires 75% creditor approval:

Creditors' meeting:

  • All creditors invited to vote
  • Need 75% by debt value to approve
  • Each £1 of debt = 1 vote
  • Meeting can be virtual

Example:

Total debt: £30,000
Creditors voting:
- Creditor A: £15,000 (votes yes)
- Creditor B: £10,000 (votes yes)
- Creditor C: £5,000 (votes no)

Total yes: £25,000 / £30,000 = 83.3%
Result: IVA APPROVED ✅

If less than 75%: IVA fails, no protection

Trust Deed Protected Status (Scotland)

Automatic protection if criteria met:

Protected Trust Deed criteria:

  1. All creditors notified properly
  2. 5-week objection period
  3. If creditors representing less than ⅓ of debt object = PROTECTED
  4. If more than ⅓ object = NOT PROTECTED

Example:

Total debt: £30,000
Objections period:
- Creditor A: £15,000 (no objection)
- Creditor B: £10,000 (no objection)
- Creditor C: £5,000 (objects)

Objecting debt: £5,000 / £30,000 = 16.7%
Under ⅓ threshold (33.3%)
Result: PROTECTED TRUST DEED ✅

Key difference: Trust Deed uses negative consent (assumes yes unless object)

If not protected:

  • Can continue as voluntary trust deed
  • No legal protection
  • Creditors can still pursue
  • Most people abandon if not protected

Fee Structure Comparison

IVA Fees (England/Wales)

Two-stage fees:

  1. Nominee Fee: £1,000-£2,000

    • Setting up IVA
    • Proposal preparation
    • Creditors' meeting

  2. Supervisor Fee: 15-20% of payments

    • Ongoing management
    • Annual reviews
    • Distribution to creditors

Example IVA fee calculation:

Payment: £400/month for 60 months
Total paid: £24,000

Nominee fee: £1,500 (from first payments)
Supervisor fee: 18% × £24,000 = £4,320
Total fees: £5,820

To creditors: £18,180

Trust Deed Fees (Scotland)

Trustee fees:

  • Similar percentage (15-20%)
  • No separate nominee fee
  • Taken from contributions
  • Paid monthly as percentage

Example Trust Deed fee calculation:

Payment: £400/month for 48 months
Total paid: £19,200

Trustee fee: 18% × £19,200 = £3,456

To creditors: £15,744

Fee comparison on £400/month:

Duration Total Paid Fees (18%) To Creditors
Trust Deed (48m) £19,200 £3,456 £15,744
IVA (60m) £24,000 £5,820 £18,180

Trust Deed = lower total fees (shorter term)

Process Timeline Comparison

IVA Timeline (England/Wales)

Week 1-2: Initial consultation with IP

  • Financial assessment
  • Debt analysis
  • IVA suitability

Week 3-4: Proposal preparation

  • Detailed proposal document
  • Statement of affairs
  • Creditor pack prepared

Week 5-6: Creditors' meeting

  • Proposal sent to creditors
  • 14 days to consider
  • Virtual meeting or decision procedure
  • 75% vote needed

Week 7+: If approved

  • IVA begins
  • First payment due
  • Legal protection starts

Total to approval: 6-8 weeks typically

Trust Deed Timeline (Scotland)

Week 1-2: Initial consultation with Trustee

  • Financial assessment
  • Debt analysis
  • Trust Deed suitability

Week 3-4: Trust Deed prepared

  • Deed documentation
  • Statement of affairs
  • Creditor notification

Week 5-9: 5-week objection period

  • All creditors notified
  • Creditors can object
  • Monitor objection levels

Week 10+: Protected status

  • If less than ⅓ objected = PROTECTED
  • Legal protection starts
  • First payment begins

Total to protection: 8-10 weeks typically

Key difference: Trust Deed takes slightly longer due to 5-week objection period

Home Equity Comparison

IVA Equity Release (Year 5)

Timing: Month 54-60 (year 5)

Process:

  1. Property valuation arranged
  2. Equity calculated
  3. Remortgage attempts
  4. If successful: Lump sum paid to IVA
  5. If unsuccessful: 12-month extension (72 months total)

Equity calculation:

Property value: £250,000
Mortgage: £180,000
Gross equity: £70,000
85% remortgage limit: £212,500
Available to borrow: £32,500
May need to pay: £32,500 OR extend 12 months

Trust Deed Equity Release (Year 4)

Timing: Month 42-48 (year 4)

Process:

  1. Property valuation
  2. Equity review
  3. Remortgage consideration
  4. If equity release possible: Paid to Trust Deed
  5. If not possible: Usually 12-month extension (60 months total)

Calculation similar:

  • 85% loan-to-value typical limit
  • Equity above this may need releasing
  • Extension alternative if can't remortgage

Key difference: Happens 1 year earlier in Trust Deed

Payment Review Frequency

IVA Annual Reviews

Once per year:

  • Review income changes
  • Review expenses
  • Adjust payment if needed

Income increase:

  • 50% of increase goes to IVA typically
  • Reviewed at anniversary

Income decrease:

  • Payment reduced if affordable
  • Supported with evidence

Trust Deed Regular Reviews

Regular reviews (frequency varies):

  • Some trustees review annually
  • Some review more frequently
  • Income changes trigger reviews

Similar principles:

  • Income increases = higher payment
  • Income decreases = potential reduction
  • Must keep trustee informed

Slight advantage: Trust Deed process can be more flexible

Public Record Comparison

IVA - Individual Insolvency Register

What's published:

  • Your name and address
  • IP name and contact
  • IVA start date
  • Case number

Duration on register:

  • Added when IVA approved
  • Remains until 3 months after completion
  • Searchable by public

Website: www.gov.uk/individual-insolvency-register

Trust Deed - Register of Insolvencies

What's published:

  • Your name and address
  • Trustee details
  • Protected status
  • Date granted

Duration on register:

  • Added when Trust Deed registered
  • Remains until 5 years after completion
  • Searchable by public

Website: Accountant in Bankruptcy (AiB) Register

Key difference: Trust Deed stays on register longer after completion

Credit Impact Comparison

Both Solutions: 6 Years

Credit file impact:

  • IVA: Recorded for 6 years from start date
  • Trust Deed: Recorded for 6 years from start date

Example timeline:

Trust Deed starts: January 2026
Completes: January 2030 (4 years)
Removed from credit file: January 2032 (6 years from start)
Still on file: 2 years after completion

IVA starts: January 2026
Completes: January 2031 (5 years)
Removed from credit file: January 2032 (6 years from start)
Still on file: 1 year after completion

Practical difference:

  • Trust Deed: Off credit file sooner after completion (2 years vs 1 year)
  • Both still 6 years total from start date

Credit Score Impact

During agreement:

  • Both severely impact credit score
  • Credit very difficult to obtain
  • Similar restrictions

After completion:

  • Trust Deed: Clean credit file 2 years post-completion
  • IVA: Clean credit file 1 year post-completion
  • Can start rebuilding during waiting period

Employment Impact Comparison

IVA Employment Restrictions

Roles affected:

  • Chartered accountant
  • Insolvency practitioner
  • Some financial services roles
  • Some company director positions
  • Charity trustee

Trust Deed Employment Restrictions

Similar restrictions:

  • Chartered accountant
  • Insolvency practitioner
  • Some financial services roles
  • Some company director positions

Scottish-specific considerations:

  • Scottish public sector roles may have policies
  • Local government positions

No major difference: Both affect similar professions

Cost Comparison Example

Real-World Scenario

Situation:

  • Total debt: £25,000
  • Can afford: £350/month
  • Homeowner (no equity currently)

Trust Deed (Scotland):

Duration: 48 months
Monthly payment: £350
Total paid: £16,800
Trustee fees (18%): £3,024
To creditors: £13,776
Debt written off: £11,224 (45%)

Time to debt-free: 4 years

IVA (England/Wales):

Duration: 60 months
Monthly payment: £350
Total paid: £21,000
Fees (18% + £1,500): £5,280
To creditors: £15,720
Debt written off: £9,280 (37%)

Time to debt-free: 5 years

Trust Deed benefits:

  • ✅ £4,200 less paid total
  • ✅ Debt-free 1 year sooner
  • ✅ £1,944 more written off

Which is Better?

Trust Deed Advantages

✅ Shorter standard term: 4 years vs 5 years
✅ Pay less overall: Due to shorter term
✅ Easier approval: Negative consent (⅓ objection threshold)
✅ More write-off: Less total paid means more written off
✅ Quicker to debt-free: 12 months sooner

IVA Advantages

✅ More established: Longer history in England/Wales
✅ Clear approval process: 75% vote is definitive
✅ Wider availability: England, Wales, Northern Ireland
✅ More IPs available: Larger market

The Real Answer

You don't get to choose - it depends on where you live:

Your Location Your Option
Scotland Trust Deed only
England IVA only
Wales IVA only
Northern Ireland IVA only

If you live in Scotland: Trust Deed is actually the better deal (shorter, cheaper, more write-off)

If you live elsewhere in UK: IVA is your only formal debt arrangement option

Moving Between Countries

Starting in One, Moving to Another

Start Trust Deed in Scotland, move to England:

  • ✅ Trust Deed continues
  • Managed under Scottish law
  • Completed with Scottish trustee
  • Not converted to IVA

Start IVA in England, move to Scotland:

  • ✅ IVA continues
  • Managed under English law
  • Completed with English IP
  • Not converted to Trust Deed

Key point: Agreement stays in original legal framework

Getting Advice Cross-Border

If you're Scottish and contact English debt company:

  • Should refer you to Scottish trust deed provider
  • Cannot set up IVA for Scottish resident
  • May have Scottish subsidiary

If you're English and contact Scottish debt company:

  • Should refer you to English IVA provider
  • Cannot set up Trust Deed for English resident

Alternatives in Each Country

Scotland Options

  1. Protected Trust Deed (discussed above)
  2. Debt Arrangement Scheme (DAS): Scottish DMP equivalent
    • Pay full debt
    • Interest/charges frozen
    • Statutory protection
    • No debt write-off
  3. Bankruptcy (Scotland): 12 months typically
  4. Informal arrangements: Standard DMPs

England/Wales/NI Options

  1. IVA (discussed above)
  2. Debt Management Plan (DMP): Informal arrangement
  3. Debt Relief Order (DRO): For low income/assets
  4. Bankruptcy: 12 months typically
  5. Administration Order: For county court debts under £5,000

Common Questions

Q: I live on the Scottish border - can I choose?
A: No, it's based on your permanent residence, not proximity to border.

Q: Which is easier to get approved?
A: Trust Deed - the ⅓ objection threshold is easier than 75% approval.

Q: Can I move to Scotland and switch to Trust Deed mid-IVA?
A: No, your IVA continues under English law regardless of where you live.

Q: Is one better for credit score?
A: Both the same impact - 6 years on credit file from start date.

Q: Which has lower fees?
A: Trust Deed typically - shorter term means lower total fees.

Q: Do employers treat them differently?
A: No, both formal insolvency solutions with similar employment impacts.

Q: Which writes off more debt?
A: Trust Deed typically - you pay less total, so more is written off.

Q: Can I travel abroad in both?
A: Yes, both allow travel with trustee/IP permission.

Scottish-Specific Resources

Advice organizations:

  • StepChange: Free debt advice (Scotland-specific team)
  • Citizens Advice Scotland: Local advice
  • Money Helper: UK-wide but Scottish options
  • Accountant in Bankruptcy (AiB): Official government body

Finding a trustee:

  • Must be registered with AiB
  • Check AiB website for authorized trustees
  • Comparison sites (Trust Deed Scotland, etc.)

English/Welsh/NI-Specific Resources

Advice organizations:

  • StepChange: Free debt advice
  • National Debtline: Free advice
  • Citizens Advice: Local offices
  • Money Helper: Government-backed

Finding an IP:

  • Must be licensed insolvency practitioner
  • Check IPA website
  • R3 (Association of Business Recovery Professionals)
  • Comparison sites

Summary

If you live in Scotland:

  • ✅ Trust Deed is your option
  • 4 years standard term
  • Generally better deal than IVA
  • Use Scottish advice services

If you live in England/Wales/Northern Ireland:

  • ✅ IVA is your option
  • 5 years standard term
  • Established solution
  • Use local advice services

Both solutions:

  • Formal debt agreements
  • Write off remaining debt
  • Legal protection
  • Credit impact (6 years)
  • Similar eligibility

The bottom line: Geographic location determines which you use, but Trust Deed is arguably the better deal (shorter, cheaper) - if you're lucky enough to live in Scotland!

Next steps:

Get Scottish advice: Contact StepChange or Citizens Advice Scotland for Trust Deed guidance

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