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Individual Voluntary Arrangements

  • • Writes off a significant amount of your unsecured debt.
  • • Stops all interest & charges.
  • • Stops court action including bankruptcy.
  • • Become debt free within 60 months (possibly 72 months if you are a homeowner).
    • Advantages
    • Disadvantages
    • Creditors who vote against your proposal are still bound by it

    • Your credit file will be affected for a period of 6 years

    • Creditors whose lending is unsecured can’t take any further action

    • You cannot take out extra finance whilst on the IVA

    • Your Insolvency Practitioner will help you prepare your proposal

    • Creditors may not approve the arrangement

    • On completion of the IVA, the balance of what you owe your creditors is written off

    • If your IVA fails, you may be made bankrupt

    • You make only a single payment each month or quarter

    • If there is some equity (value) in your home after taking account of the mortgage(s) on it, you will probably have to pay for your share, usually in the fifth year of your IVA, by remortgaging the property

    • Your creditors will be legally required to stop contacting you

    • The IVA is recorded on a public register

Trust Deeds

  • • Scottish equivalent of the IVA, writes off a significant amount of your unsecured debt.
  • • Prevents or stops any legal action - including sequestration.
  • • Write off all interest & charges.
  • • Become debt free within 48 months (again may be extended if your a homeowner)
    • Advantages
    • Disadvantages
    • Your creditors will be legally required to stop contacting you

    • Your credit file will be affected for a period of 6 years

    • Financial stability in 48 months

    • Creditors will be able to pursue you for any new debts

    • Only your disposable income will be used to pay creditors

    • It will be advertised in the local press, but only could be found if someone knows to look

    • Able to negotiate terms

    • Creditors will be able to pursue you for any new debts

    • If you're a business, carry on trading

    • Creditors may not approve the trust deed

Debt Management Plans

  • • Debt Management could help you reduce your monthly outgoings to make repayments more affordable.
  • • One affordable monthly payment without borrowing any more money.
  • • A Debt Management Plan is an arrangement between you and your Creditors to make payment at a reduced rate.
  • • Expert negotiation with the creditors where interest & charges are requested to be frozen.
  • • Payment dates can be set to suit you.
  • • On a Debt Management Plan the amount you can afford to pay your creditors each month is split amongst them on a pro-rata basis depending upon how much you owe them.
Debt management plan fees

If we find after assessment that a debt management plan suits you best we will refer you to a charitable organisation to get help with one.

    • Advantages
    • Disadvantages
    • Pro rata payments shared fairly to your creditors

    • You remain liable to pay your debts until they are paid in full

    • Only your disposable income will be used to pay creditors

    • The debt will remain on your credit file for 6 years after it has been settled

    • If your creditors agree to accept your DMP proposal, you can expect them to significantly reduce their contact with you

    • Not all creditors have to agree to the terms of a Debt Management Plan. On an IVA or Trust Deed, if a certain proportion to accept the proposal, then all are bound by it

    • You may be able to vary your payments if your circumstances change

    • Even if you are maintaining payments to your plan, your Creditor could still take enforcement action against you such as obtaining a County Court Judgement (CCJ)

    • Contact from your Creditors will reduce if they are happy with the revised repayment plan

    • Depending upon the amount of credit that you have, and the amount of disposable income you have available to pay your Creditors; a Debt Management Plan may last longer than other debt solutions

    • You make single payments each month or quarter to the debt management company, which is responsible for administering all payments to your creditors

    • Any monthly payment you make should be passed on to creditors within 5 working days

    • Some debt management companies do not charge you a fee

Debt Relief Order

Debt Relief Orders (DROs) are one way to deal with your debts if you owe less than £20,000, don’t have much spare income and don’t own your home.

If you get one:

  • • Your creditors can’t recover their money without the court’s permission
  • • You’re usually freed (‘discharged’) from your debts after 12 months
Get a Debt Relief Order

You get a DRO from the Official Receiver, an officer of the bankruptcy court, but you must apply through an authorised debt adviser. They’ll help you fill in the paperwork.

The Money Advice Service has information about where to get free debt advice.


The official receiver’s fee is £90. Your debt adviser can tell you how and when to pay it. In some cases a charity may be able to help you with the cost - ask your debt adviser.


You’re generally eligible if you meet all of these criteria:

  • ● You owe less than £20,000
  • ● You’ve less than £50 a month spare income
  • ● You’ve less than £1,000 worth of assets
  • ● You’ve lived or worked in England and Wales within the last 3 years
  • ● You haven’t applied for a DRO within the last 6 years

You must follow rules called ‘restrictions’ if you get a DRO.

This means you can’t:

  • ● Borrow more than £500 without telling the lender about your DRO
  • ● Act as the director of a company
  • ● Create, manage or promote a company without the court’s permission
  • ● Manage a business without telling those you do business with about your DRO

If you want to open a bank account, you may also have to tell the bank or building society about your DRO.

Check the individual insolvency register to see when the restrictions end.

The restrictions usually last 12 months. They can be extended if careless or dishonest behaviour caused your debt problem. For example, you lied to get credit.

The official receiver will tell you if they should be extended. To extend them, you’ll be asked to agree to a ‘Debt Relief Restrictions Undertaking’. The court can issue a ‘Debt Relief Restrictions Order’ if you don’t agree.

What you need to know

While you have a DRO you still have to pay:

  • ● Your rent and bills
  • ● Certain debts, eg student loans, court fines

DROs can be cancelled if:

  • ● Your finances improve
  • ● You don’t co-operate with the official receiver - eg you don’t give them the information they ask for

If you get new debt after your DRO is approved you could:

  • ● Get a bankruptcy order
  • ● Be prosecuted if you don’t tell new creditors about your DRO

Your DRO is added to the individual insolvency register - it’s removed 3 months after the DRO ends.

Your DRO will stay on your credit record for 6 years.


If you have a debt problem, one of your options for sorting it out might be bankruptcy. You can apply for bankruptcy if you can’t pay back your debts.

As well as applying for bankruptcy yourself, someone else you owe money to (a creditor) can apply to make you bankrupt, even if you don’t want them to. For a creditor to make you bankrupt, you must owe at least £5,000.

Remember, bankruptcy might not be your only option and it might not be the best one for you. One of your other options might be a debt relief order. You could be able to apply for a debt relief order if you have debts, income and property below a certain amount. This is a cheaper alternative to bankruptcy.

    • Advantages
    • Disadvantages
    • When the bankruptcy order is over you can make a fresh start - in many cases this can be after a year.

    • To apply to go bankrupt you’ll need to pay a £680 fee

    • The pressure is taken off you because you don’t have to deal with your creditors

    • If your income is high enough, you’ll be asked to make payments towards your debts for 3 years

    • You're allowed to keep certain things, like household goods and a reasonable amount to live on

    • It will be more difficult to take out credit while you're bankrupt and your credit rating will be affected for 6 years

    • Creditors have to stop most types of court action to get their money back following a bankruptcy order

    • If you own your home, it might have to be sold (but you may be able to apply to your local authority for re-housing)

    • The money you owe can usually be written off

    • Some of your possessions might have to be sold, for example, your car and any luxury items you own

    • You make single payments each month or quarter to the company which is responsible for administering all payments to your creditors

    • If you are, or are about to be, the right age to get your pension savings, these might be taken

    • Any monthly payment you make should be passed on to creditors within 5 working days

    • Some professions don’t let people who have been made bankrupt carry on working

    • Some companies do not charge you a fee

    • If you own a business it might be closed down and the assets sold off

    • Going bankrupt can affect your immigration status

    • Notification of your bankruptcy will be made public (although if you’re worried you or your family maybe the victims of violence, you can ask that your details aren’t given out)

What happens at the end of bankruptcy

After 12 months you’re usually released (‘discharged’) from your bankruptcy restrictions and debts. Assets that were part of your estate during the bankruptcy period can still be used to pay your debts. If you are subject to an Income Payments Agreement, or Order then this could last for up to 3 years.

If you do not co-operate it can be extended and in the most serious cases a bankruptcy restrictions order could be placed against you for a period of up to 15 years.