We help thousands of people become debt free at Debt Support Trust. The charity is committed to helping people who have debt problems find a route to become debt free again. One solution which is sometimes applicable is an IVA, in England, Wales or Northern Ireland and a Trust Deed in Scotland. However, many people contact our charity to say "I've been missold an IVA or Protected Trust Deed".
Mis-Sold an IVA
An Individual Voluntary Arrangement, or IVA, is suitable for about 10% of people who contact Debt Support Trust. The majority of people may have heard about an IVA through TV advertising, however, there are pros and cons which should be considered before anybody enters the solution.
An IVA allows a person to make an affordable monthly payment towards their debt for 5 years. Near the end of the IVA assets, like a house or car, are reviewed to determine if there is any equity. You are not expected to sell your house, but the equity would need to be released, typically through a remortgage or third party purchase. If this is not possible then the IVA can be extended for 1 extra year to cover the equity.
The Protected Trust Deed is the Scottish equivalent of the IVA but only lasts for 3 years. The property is dealt with differently in a Protected Trust Deed compared to an IVA.
With almost 50,000 IVAs and Trust Deeds in the UK every year it's a popular solution to deal with debt, but is it the right solution?
Fees for IVAs and Trust Deeds
Insolvency practitioners are required to propose an IVA or Trust Deed to your creditors. The fees for managing your case will run into the thousands, with some fees being £7,000 for the 5 years.
These fees are reviewed and accepted by your creditors, but high insolvency practitioner's fees means that less money will be returned to your creditors.
If during the course of the IVA or Trust Deed you inherited money and could afford to repay all of your debt, you would also have to pay for insolvency practitioner fees too.
Misselling of IVAs and Trust Deeds
It's a question we get asked a lot - have I been missold an IVA or Protected Trust Deed and sometimes there's an easy answer and others it's less clear.
Often we hear about people thinking they are in an IVA or Trust Deed, to only find that they are in fact in a debt management plan.
Before entering your IVA or Trust Deed were you told about the length of time your solution would last? This can often change during the course of the solution for multiple reasons. Were you informed about assets? Equity in a property, car, stocks, shares or bonds should be explained fully. Were you provided with every available debt solution? You may not wish to enter a debt management plan, debt arrangement scheme or bankruptcy but, if applicable, you should be informed of the pros and cons of this solution.
If you feel you have been mis-sold an IVA or Trust Deed you should first speak to the debt solution company. The company should then conduct and investigation and determine if you are correct. If they disagree with you then you can approach the Financial Ombudsman Service for free. They will then determine if you have a case.