Insolvency….what it all means.

In these difficult economic times, reports continue to surface of record numbers of people entering bankruptcy or the Scottish bankruptcy equivalent, sequestration.  According to R3, the Association of Business Recovery Professionals, personal insolvencies for 2009 stood at 134,142.

Many leading financial experts suggest that we are a long way off from a rosier economic outlook.  The future of employment in the UK is also giving many cause for concern as redundancies continue in many sectors.

To deal with this bleak outlook, those affected hardest by the recent recession are arming themselves with knowledge about the range of debt solutions available to get them back on the road to financial freedom.

We’ve compiled a brief guide to the various solutions but for more information, click on the heading links.


Being bankrupt lasts for one year only and is one way of dealing with extreme debt problems.  After a year you will be debt free but the information remains on your credit file for a minimum of 6 years.  You are also in danger of losing your home and other assets which are sold off and the proceeds shared among your creditors.


Sequestration is the Scottish law equivalent of bankruptcy.  Although similar, there are some differences between the two processes and as with bankruptcy, sequestration should only be considered as a last resort debt solution.

IVA (Individual Voluntary Arrangement)

There are benefits of an IVA over bankruptcy, including less chance of losing your home and less social stigma.  An insolvency practitioner will negotiate a deal between you and your creditors and it may involve interest on your debt being reduced or frozen.

Debt Relief Order

A Debt Relief Order (DRO) is available in England, Wales & Northern Ireland and allows consumers with debts of less than £15,000 and few assets to write them off without having to resort to full bankruptcy.


Similar to a Debt Relief Order, LILA (low income, low assets) is the equivalent in Scotland.  It is designed to enable individuals with a certain level of income and few assets, who are unable to repay debt within a sensible timescale, to clear their outstanding arrears.

Trust Deed

A Trust Deed in Scotland is similar to an IVA in England & Wales.  The Trustee arranges a legally binding agreement with you and your creditors based on your assets and income and pays them a proportion of the amount you owe them.  At the end of the Trust Deed time period (usually 3 years), you will be debt free.


These are a few of the debt solutions available.  If you are experiencing financial difficulty, we can help you.  With the ever increasing statistics of the number of people taking on a debt solution, it is important for you to know that you are definitely not alone.

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