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Debt Problems – Common Legal Solutions in Plain English

People facing debt problems are often under pressure and it can be difficult to know where to begin to sort unmanageable finances out. This article presents a summary of legal debt management options available for different circumstances in straightforward language to help you before contacting an expert for impartial debt management advice.


An option for debts totalling £15,000 or more to 3 or more creditors. Properly advised Individual Voluntary Arrangements (IVAs) should be an agreement made for at least five years involving a more affordable monthly payment. After being finalised, there should be no more letters or phonecalls or new court actions from creditors demanding payment. They’re not announced in local papers and can sometimes (but not always) stop people losing a home. If you adhere to the IVA properly, those outstanding debts are written off on its expiry.

Since it involves legal steps, do obtain impartial debt management advice to see if it is the best option. A Licensed Insolvency Practitioner (IP) represents you if you go ahead.

Debt Management Plans

Another option for people owing 2 or more creditors a total of at least £5,000 (or more). Essentially, a plan devised with a third party who negotiates with creditors. Throughout the plan, your payments are made to the third party for subsequent distribution among your creditors.

Candidates would need at least £100 monthly ‘disposable income’. That means each month, £100 after essential living expenses and routine bills (mortgage/rent, food, travel costs/petrol, childcare, gas/electricity, etc).

Again, to ensure it would be the best solution for your particular debt problems talk to a specialised debt management advisor.

Trust Deeds

Operate in Scotland and involve working with an Insolvency Practitioner (IP) to draw up a payment proposal for them to present to creditors, typically a 3 year payment plan. 2 types exist, for the first type, it is essential creditors agree to the proposal. For the second type (‘Protected Trust Deeds’) creditors agree to stop new interest, charges and contact with you demanding payment. Its not possible to fully detail every aspect in this brief summary, so do contact a quality debt advisor to find out more.


A Trustee is appointed to review your finances, taking into account your everyday living expenses and you declare any assets including property. The Trustee oversees the sale of assets not required for everyday living and distributes the proceeds raised to your creditors. Until discharged, you can’t be a company director or carry out certain trading activities, and you must tell future creditors about the bankruptcy. It is characterised as having the least privacy among the options here.

As you can imagine, there are a number of legally binding steps involved and we cannot emphasise strongly enough how important good quality debt advice is here. It may provoke strong reactions but quality debt advice can explain the type of situations when it presents an option.

By now, you should have a little more insight into the most common legal solutions but we do repeat our statement, good quality impartial advice can help you avoid some of the misleading or untrue claims made by more dubious companies at a time when you may be under strain.

From our Directors’ eleven years professional support roles providing impartial debt management advice, we feel every situation merits a high quality realistic debt management response.

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