We have come across a number of cases where Individual Voluntary Arrangements have been missold. Initially, IVAs were introduced to help people who were insolvent to reach an arrangement with creditors (usually non-priority creditors) to repay her/his debts in part or in full. The arrangement is prepared and monitored by an independent person called an Insolvency Practitioner (IP).
An IP should examine your financial circumstances and decide whether a voluntary arrangement is appropriate. A voluntary arrangement is generally only appropriate if you have:
The IP should make an assessment on whether a voluntary arrangement is appropriate or if bankruptcy would be a better option.
Bankruptcy is likely to be more useful than an IVA if you have multiple debts, no property or no equity in your property, no income and no likelihood of these factors changing.
The IP should also be explaining the disadvantages to IVAs, such as:
We have received numerous complaints against Insolvency Practitioners selling IVAs where the client should be advised to apply for bankruptcy.
We have also heard stories of Insolvency Practitioners are causing financial hardship through advising people to sign up to high payments on IVAs, leaving the debtor unable to pay essential expenses such as mortgages and utility bills.
Further complaints have been made against Insolvency Practitioners failing to advise debtors that their home would need to be remortgaged in the final year of their agreement.
Over the years IVAs have been mass marketed and we believe there must be thousands of people out there who have been sold an IVA when other options would have been more suitable to help clear debts. Our advisors are on hand to offer free impartial advice on IVAs, bankruptcy, debt management, administration orders, or challengeable credit agreements.