While IVAs (individual voluntary arrangements) continue to hit the headlines, with record numbers in place and more on the way, what are these Trust Deeds being talked about in Scotland.  Are they any different? Can I get a Trust Deed in England?

In reality IVAs and Trust Deeds (also know as a Protected Trust Deed)are very similar (if not identical), but because of different laws in Scotland there are no IVAs.  Where as in England there are IVAs but no trust deed solutions for debt and financial problems.  They are both legally binding agreements with creditors, ensuring that the person (or people involved) pay back an agreed figure to their creditors, in exchange for the balance being written off after a period of normally 5 years.

Some may find it a little surprising that only a majority of creditors need to agree to the legal proposals before going to court.  In reality, the vast number of creditors will agree to any arrangement which ensures that they at least receive settlement of part of the debt, although there are signs that the banks may be getting a little tougher over the subject of IVA and Trust Deed fees.

If for some reason the person is not able to abide by the Trust Deed or IVA then they need to approach their trustees as soon as possible and let them know the reasons why they will struggle.  It is possible at this point to either modify the IVA or Trust Deed, or possibly consider full bankruptcy.  Bankruptcy is the ultimate step, but unfortunately many people have been through this in the UK over the last decade.

As problems continue to build and the economy starts to falter, we will see a marked increase in debt solutions such as these.  Again, the UK economy is set to endure a great deal of pain before the sun starts to shine again.

While the situation can be so very similar for many across the UK, the IVA laws in the England, Ireland and Wales are different from the Scottish arrangement.  Scottish law does not allow IVAs, but it does offer protection using a Trust Deed, also known as a Protected Trust Deed.  So what are they?

They are very similar in style and characteristics to the IVA which has become so popular in other areas of the UK.  A Trust Deed would require a Trustee to be appointed to first of all consider your situation and see if there are any alternatives to a Trust Deed.  If in their opinion there is no other option the Trustee would then set about contacting all of the client’s creditors to inform them that a Trust Deed is being considered and would they consider a specific payment plan for the debtor.

The vast majority of creditors will agree to a Trust Deed because for many it is the only way of getting any return out of a difficult situation.  If the customer was forced into bankruptcy, then the return for any creditors would probably be substantially less that that for a Trust Deed arrangement.  While there have been suggestions that Scottish law would be amended to fall into line with the rest of the UK, this seems highly unlikely – especially if, as many suggest, Scotland declares independence at some point in the future.  A Trust Deed needs to be approved by a court of law, and is legally binding.

For those who live in Scotland and feel that they may need to consider a Trust Deed, do not be alarmed by the difference to the more traditional IVA.  They still offer very solid legal protection from creditors, so long as you abide by your payment plan.  For many people they can be a life saver and often signal the end of a difficult period in their financial lives.

As many people will know, the Bank of England have today announced a reduction in UK base rates to 5.5%, the first reduction in UK rates since August 2005.  While there has been much praise for the move, is it too little too late or will it help?

Even though there is no doubt that any reduction in rates will assist the economy and the working population in some form, this rate cut seems to have been long overdue.  However, it must be said that this has not really been the fault of the Bank of England because we have in effect been running a dual economy for some time.   While the property market was flying high many people were suffering from increased debts and massive financial worries.  Many people were having to  and continue to stare bankruptcy in the face, and while some have found a bankruptcy alternative in the shape of IVAs (or Trust Deeds in Scotland), there are still many people suffering.

We also had the problem of inflation which was the main reason why the Bank did not reduce rates sooner.  Now that we are staring what could be a very serious economic slowdown in the face, the threat of a resurgent inflation rate has all but disappeared.  This is also one of the reasons why we will also see more rate reductions in the short term.

What next?

The UK economy is set for a major slowdown over the next couple of years, at a time when many had been counting the paper profit on their housing assets.  These profits are slowly ebbing away and it is going to become more and more difficult to sell properties for their “true value”. 

The UK population and the UK economy will need further assistance from the likes of the Bank of England although there will need to be a certain level of self cleansing – no pain no gain.  The Bank of England have been very big on the fact that they cannot, and will not, bail out the economy if there have been bouts of over exuberance or plain mis-management.  For this situation there needs to be some pain, something which is set to hit us in abundance very very soon!

Many people in the UK are in serious financial trouble, with hundreds of thousands more expected to join them as the UK starts to fall into a potentially serious economic slowdown.  We have recently seen signs that the housing market is falling back, a slowing of the actual number of physical properties sold and a whole host of introductory mortgage offers come to the end of their discount period.  All of these situations have come together at a time when job security is reducing, wage rises are struggling to keep up with even the most basic rate of inflation and more and more people are struggling.

So what do you do when your finances start to crumble?

The first thing which the majority of people do is “hide their head in the sand” and hope that everything will fix itself.  While this may have rescued many when the property market started to pick up, this little life line is now fast disappearing, leaving many people to “face the music”. While the words bankruptcy and IVA were very much frowned upon and not spoken about, they are becoming a main part of the UK financial market vocabulary – and the numbers being granted have increased dramatically.

While many people overlook IVAs they are a viable bankruptcy alternative and for many they have given them the breathing space to re-arrange there finances, pay back a percentage of their debts and start again.  While it may not be quite as easy as that, IVAs are an alternative, however if your situation is out of control then bankruptcy may well be the sensible option for you.

The laws and regulations ruling bankruptcies have been changed over the years and the penalties in later life are no where near as dramatic as they once were.  The period of bankruptcy has been reduced and while there will be an impact upon your short to medium term credit rating, you can recover you rating in the longer term.

Many people also fall into the trap of taking advice too late, which can be the difference between an IVA and bankruptcy, and a big difference to your credit rating.  As soon as you feel the pressure there is no harm in taking advice, advice which may actual means that neither IVAs nor bankruptcy need to be considered.

Don’t hide you head in the sand, as it will only be worse when you finally pop up for air!

Over the last few years we have seen the levels of personal debt increase substantially in the UK, and they are set to get a lot worse over the next couple of years.  Recent news about the UK economy is not good, consumer confidence is at a record low and people are still intending to spend big on Christmas!

There are many reasons why the debt crisis could hit home over the next few months but the main reason seems to be the cooling of the property market.  Many people have masked their own problems with the thought that their property assets would always bail them out if they got into real trouble.  As the market looks set to stall, and prices fall back in 2008, many people are starting to think again.  If they sell up, where would they move to? What could they buy with what was left out of the sale proceeds less mortgage liabilities? Not a lot……..

On the top of this we have seen credit card debt mushroom over the last decade, with more and more people not being able to payoff their outstanding balances at the end of the month.  While minimum payments may be covered, the interest and outstanding capital continues to rise month on month, storing up potential enormous trouble for later.  The trend for “credit card surfing” has also hit the buffers, with the recent credit crisis resulting in a record number of credit card applications being rejected.  So what are the options if you realise that your liabilities are getting out of control?

It is imperative that your seek debt help as soon as possible, whether this is just general advice about how to organise your finances or specific IVA help – a subject which is rapidly rising to the surface of the financial world, and fast becoming the debt solution of choice for many.

As the UK begins to wake up the high probability of what could turn out to be a very heavy recession occurring, many home owners may slowly be realising that the “profit” on their home may not be enough to bail them out of any financial trouble.  So what really is happening underneath the surface?

The UK has seen a massive increase in personal debt over the last decade, with the cost of living soaring higher each year, your tax outgoings increasing substantially and the housing market continuing to rise year on year – until now!

We are in a situation where the average house in the UK costs somewhere in the region of £200,000 which is about 9 times the average wage – thereby taking out a mass of potential first time buyers from the market.  This then leaves the buy to let investors with a big say in the market, but surely buy to let has done well?

The idea between buy to let is to use income from the rent to cover the mortgage on the property, and while this was just about possible a few years ago, we have seen house prices rise by 10% a year for the last few years, whereby rents have only increased by 3% a year, leading to an ever growing short fall.  While many investors will have made good capital appreciation on their investments, they will at some point need to sell to cover the outstanding mortgage, causing a fall in property prices.

In a very short period of time many home owners will see their “profits” reduce until such a point that some will need to sell to cover their personal debts.  If the housing market was to stall and the number of sales reduces then many people would be left with a home which is falling in value and rising personal debts.  This is where many people will be forced to seek professional Debt Help, and the various options open to them such as IVA and Bankruptcy protection,

For those looking at bankruptcy or an IVA help is at hand through the masses of UK companies who specialise in this area of finance.  The number of the UK population who are in serious financial trouble has grown significantly over the last decade although it has rarely been headline news as the property market continued to boom.  Perhaps that is all about to change?

As the insurance market continues to grow year on year, we are seeing a number of specialist niche players where once there was domination by the majors.  This push by the niche insurers has led to extreme competition in the areas of price and service.  It seems like the mobile catering business has never been so well accommodated for!

As anybody who has ever been involved in the mobile catering industry will know, it is imperative that you are covered for all eventualities.  Loss of earnings, accidents, breakdown and any possible events which will stop you from bringing in business and earning a living.  What is commonly known as catering trailer insurance is becoming ever more vital, and while some of the options are not always required by law, who would chance their whole business for the sake of a few pounds a month?

We are seeing mobile catering appearing at a whole host of events including, football matches, concerts, the circus, amusements and a vast array of private and public events.  Unfortunately, with such increases in the market exposure comes an increase in the requirement for insurance, to cover both the proprietor and the customer.  We have also seen the introduction of a great deal of new laws from both the UK authorities and the EU authorities in what many are seeing as an attempt to stamp out the mobile catering business.

So is the industry fighting back?

Too right! While the old days and the old image of the mobile catering industry are still held drearily by many of the pubic, those days have long gone.  The industry is more professional, more streamlined and a lot more efficient than in the olden days.

We have also seen a vast improvement in the equipment and vehicles which are currently in use, although this has been at a cost, a cost which has to some extent been passed on to the customer in the form of additional services and an extra cost for these improvements.  It seems that many customers are only too willing to see the back of the old style food, and welcome in the new, even if it does cost a little extra!

Why do the insurers see such potential in the market?

Insurance companies very rarely invest into markets where they do not see potential for substantial growth, where they have not seen substantial regulatory changes and where their risks have been capped to some extent.  The regulations of today ensure that much of the chance of mishap from the food has all but disappeared, safety standards on the equipment have improved massively and while there are risks associated with any business, mobile catering has seen much development.

Is the insurance market deep enough to provide a quality service?

The niche players who have entered the market have also prompted something of a shakeup at the majors, who are not having it all of their own way any more.   Competition is good for the consumer but competition amongst the insurers is great for the mobile catering companies!