Individuals

Getting daily phone calls and letters is stressful.  By means of formal or informal arrangements, dreading the phone ringing can go away. It has to be underlined that the role of an IP is to act in the best interests of creditors, but an IP does have a duty of care to you as well. Third party sources to visit about the services discussed below are the Accountant in Bankruptcy website (www.aib.org.uk) , the Institute of Chartered Accountants of Scotland (www.icas.com) who regulate Claire Middlebrook our IP, or R3 (www.R3.org.uk) the trade body for insolvency professionals.

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1. Trust Deed – A contract between you, those you owe money to and an insolvency practitioner. This is governed by insolvency legislation and, barring the exception below, would take account of anything owned by you at the date of signing. At the outset a questionnaire is completed to get an understanding of what you owe, to whom and what you may own. In most cases, the biggest one thing anyone owns is their family home. Any equity held in your home needs to be brought into the Trust Deed for the benefit of your creditors. There are various ways this can be achieved. A contribution from your monthly earnings is usually taken for 48 months. This is based on guidelines set out in The Common Financial Tool etc (Scotland) Regulations 2014. All unsecured debts owed by you are caught by the Trust Deed. At the end of the Trust Deed period, any monies still owed to your creditors is written off.

2. Sequestration – Formal insolvency process. Sequestration can be instigated by a creditor or yourself. Sequestration lasts a period of 12 months, however your Trustee needs to agree to your discharge. All of your assets as at the date of your sequestration vest in your Trustee and they are no longer under your control.  You may be asked to make a contribution to your sequestration.  This will be assessed by means of the Common Financial Tool as in the Trust Deed. At the end of the sequestration the remainder of any debts outstanding is written off. There are various restrictions placed on those who are sequestration, the main one is being forbidden to act as a company director

3. IVA – An Individual Voluntary Arrangement (IVA) is a legally binding agreement between yourself and your unsecured creditors whereby you agree to pay back a certain amount over an agreed period of time, generally 60 months. However, the amount you pay and the period of time will vary depending upon your circumstances and can be extended in certain circumstances. The IVA proposal will be required to be agreed by 75% of your creditors who take part in the vote.  Once the IVA has been completed successfully then you are no longer liable for your unsecured debts.