As English and Welsh Insolvency Service looks to simplify and speed up the
IVA process, the Scottish Executive has entered into consultation over its plans
to discourage debtors from entering into ‘protected trust deeds’ – roughly
equivalent to IVAs, in that the debtor is not declared ‘bankrupt’ and offers all
parties a somewhat reasonable solution.
The Scottish plans aim to reduce the number of trust deeds entered into by
debtors and instead encourage alternative options such as sequestration, which
involves the debtor losing their property and being effectively classed as
‘bankrupt’. Plans also include a minimum return for creditors on trust deeds
that is predicted will see the scheme used less.
The differences led ICAS head of insolvency Anne Bryce to describe them as
As if to further complicate the differing approaches, changes to Scottish
legislation could allow English and Welsh IPs to work with Scottish clients. Not
only is the legislation different, but it would be a nightmare for IPs’ mindset,
as they consider what options are available for their clients and what creditors
would expect from them.
There are other spanners in the works. Opening the border could see debt
consolidators flood the Scottish market, some of whom do not have great
reputations as far as helping people out of financial troubles.
And concerns have risen that there is just too much work for the IP
profession. Blame it all on the credit-friendly banks, I say.
Kevin Reed is a reporter on Accountancy Age