A brief guide to debt solutions

Debt advice….Bankruptcy….Insolvency….IVAs….you may have heard these words in relation to debt but do you know what they really mean?  Would you know what debt solution is right for you and your financial circumstances?

If you’re in financial difficulty and need to speak to us, you may want to familiarise yourself with the options that we may outline to you.


Bankruptcy is probably the most well known debt solution but it is by no means the only one.  Bankruptcy is usually a last resort debt solution because of its severity.  You will be bankrupt for 1 year only but the impact on your credit file can last for a minimum of 6 years plus your home and other assets are at risk of being sold so that contributions can be made to your creditors.


Sequestration is the Scottish equivalent to bankruptcy.  Although broadly similar, there are some differences in the process they follow.  As with bankruptcy, sequestration should only be considered as a last resort when all other debt solutions have been ruled out.

IVA (Individual Voluntary Arrangement)

An IVA involves paying a proportion of your debts over a number of years as arranged by an Insolvency Practitioner who negotiates the agreement between you and your creditors.

Protected Trust Deed

Protected Trust Deeds are only available in Scotland.  Very similar to an IVA in England & Wales, it involves surrendering certain assets to a Trustee and making a regular contribution from your income.  The Trustee arranges a legally binding agreement between you and your creditors which must be adhered to during the time period (usually 3 years).

Debt Relief Order

Available if you have very few assets and debts of less than £15,000, a Debt Relief Order will allow you to write off your debts without having to resort to full bankruptcy.


LILA is the equivalent in Scotland to a Debt Relief Order.  It is for people who have low income and low assets (LILA).


Those are a few of the debt solutions available.  Your ideal debt solution will depend on the amount of debt you have, the assets you own, your income and your individual circumstances.  The important thing to remember is that help is out there if you need it.

Don’t be afraid to ask for help, you’re not alone.

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