Can you get an IVA in Scotland?

You cannot get an IVA in Scotland. Individual voluntary arrangements are set up under the Insolvency Act 1986, and the part of that Act that creates them does not extend to Scotland. The nearest Scottish equivalent is a protected trust deed, which works in a similar way but has its own rules on how creditors agree, fees, and how long it lasts.

This page explains the difference and what to do if you have lived in both countries. It is general information, not advice about your own situation.

Why can’t you get an IVA in Scotland?

Scotland has its own insolvency law. IVAs are created by Part 8 of the Insolvency Act 1986. Section 440(2)(b) of that Act says the “second Group of Parts” does not extend to Scotland. That group covers IVAs, debt relief orders and bankruptcy in England and Wales.

What is the Scottish equivalent of an IVA?

The closest match is a protected trust deed. It is a legal agreement under the Bankruptcy (Scotland) Act 2016 in which you pass your estate to a trustee, who is a licensed insolvency practitioner. You pay a monthly contribution based on what you can afford, usually for 48 months. If the trust deed becomes protected and you keep to its terms, the remaining debts included in it are written off when you are discharged at the end.

A trust deed is not the only option, and it is not right for everyone. It has fees, it affects your credit rating for six years, your name goes on the public Register of Insolvencies, and homeowners may need to release equity. Some debts, such as student loans and fines, are not written off. If it fails, creditors can pursue you again and the trustee can petition for your sequestration. For the full picture, see what a trust deed is.

How does a trust deed compare with an IVA?

How is creditor agreement different?

This is one of the most important differences.

An IVA needs a positive vote. GOV.UK says it will start if the creditors holding 75% of your debts agree.

A trust deed works the other way round. Once your trustee registers a notice in the Register of Insolvencies, creditors have 5 weeks to object in writing. The trust deed is treated as accepted unless a majority of creditors by number, or creditors owed at least one third of the total value, object. If they do, it cannot become protected. A single creditor owed a third or more of your total debt can therefore stop it becoming protected on its own. You also need to owe at least £5,000, including interest, to grant a protected trust deed. See how a trust deed becomes protected.

What if you have recently moved from England?

Which country’s debt solutions you can use depends on your connection to each one. The rules differ, and they can overlap.

• Scotland: trust deed. You must have been habitually resident in Scotland, or had an established place of business here, at any time in the year before you grant the trust deed.
• Scotland: sequestration. The same one-year test applies to applications made to the Accountant in Bankruptcy (AiB), Scotland’s insolvency service.
• England and Wales. The tests look back further. GOV.UK says a debt relief order needs you to have lived or worked in England and Wales within the last 3 years, and the rules for bankruptcy there also look back 3 years.

So if you moved from England within the last few years, you might meet the tests in both countries, or you might not clearly meet either. “Habitually resident” is a legal idea, not just a question of your address, and it depends on the facts. Where it is not clear which country’s law applies, an adviser must check before anything is set up.

A few practical points:

• If you already have an IVA, do not stop paying because you have moved. Talk to the insolvency practitioner who supervises it.
• In Scotland, debts are enforced by sheriff officers (officers of the court) rather than bailiffs, under the Scottish rules on diligence (enforcement action).
• Tell any adviser exactly when you moved and where you have lived and worked, so they can work out what is open to you.

What other options are there in Scotland?

A trust deed is one of several Scottish solutions. Depending on your situation, an adviser may also look at:

• The Debt Arrangement Scheme (DAS). You repay your debts in full through a payment programme, with interest, fees and charges frozen and written off when you finish. It is free to set up through a money adviser.
• Sequestration. Bankruptcy under Scots law. See how it compares in trust deed or sequestration.
• The Minimal Asset Process (MAP). A simpler route into bankruptcy for people with low income and few assets. It has no fee.
• A debt management plan. An informal plan with no legal protection.
• A moratorium. Six months of protection from diligence while you get advice.

Be careful with adverts. The FCA warns that some debt adverts make misleading claims about how much debt you can write off, or call a solution “government backed”. Free, impartial advice is available from free debt advice services in Scotland.

Official sources

• Insolvency Act 1986, section 440: extent in Scotland
• GOV.UK: individual voluntary arrangements
• Bankruptcy (Scotland) Act 2016, section 164: who can grant a protected trust deed
• Bankruptcy (Scotland) Act 2016, section 15: jurisdiction for sequestration
• Insolvency Act 1986, section 263I: bankruptcy jurisdiction in England and Wales