Interesting article on IVAs

MrsTinks

I have to say I'm looking forward to seeing those new stats tomorrow too - I think generally IVA are recommended far too readily by the "lovely and caring" companies on TV (which frankly I think are deeply misleading...). Maybe these stats will prove the unbelievers among us wrong - you never know!

North_East_Derbyshire_CAB

Charco wrote: »

Good advert :rolleyes:

Could have told you who'd be in it before i read it!

"As many as one in five debt repayment plans are falling by the wayside, leaving thousands of Britons in danger of going bankrupt."
Clever IMPLICATION that one in five IVAs fail when in fact thats not really the case... one in five debt repayment plans fail, well that's a different thing!

"Many individuals who have taken out an individual voluntary arrangement (IVA) to reduce their debt have been unable to stick to the repayments and now have a lapsed plan that threatens to tip their finances over the edge."
Does that mean that these IVAs were doomed to failure from the very beginning? NO! Circumstances change.
No-one goes out to run up massively unmanagable debts - but circumstances change.


Interestingly (about the only thing interesting in the whole article) we're told the CCCS has only suggested IVAs for 2% of those who have called them in the first half of the year... that's down 1% on previous years, going by the claims on their own website.

So let me get this straight.
The whole industry steps up and they step down!? In a recession!? With small businesses going to the wall right, left and centre!? With more and more houses in negative equity and levels of unmanagebale unsecured borrowing rising? Really? They're recommending LESS IVAs? Is there a reasonable explanation for this other than the IPs are bogeymen!?

Hello again Charco

Taking into account your comment 'Clever implication that one in five IVAs fail when in fact thats not really the case' We are wondering if you have seen the recently released stats on IVA Failures & completions for 1987 -2008.

NED-CAB

rog2

North_East_Derbyshire_CAB wrote: »

Interesting article on problems with IVAs:

http://www.guardian.co.uk/money/2009/nov/01/individual-voluntary-arrangements-failure

It is a very interesting article, thanks.

Forgetting, for a moment, the arguments over 'statistical accuracy', the article, to me at least, highlights the fact that so many 'ambulance chasers' have seen the 'IVA' as little more than a way to make money (often lots of it) out of the misfortune of a debtor, who is usually so desperate to sort his/her problem that he/she will grab the first straw he/she sees without exploring all of the possibilities, that the value of the IVA, as a genuinely viable 'debt solution' has been seriously devalued.

Nobody doubts that a properly managed IVA can be an ideal solution for some debtors, in particular those for whom the only other solution would be full blown bankruptcy, where bankruptcy would have a serious effect on their lives, such as the inability to pursue their chosen career path, or the loss of their home. Indeed, an IVA taken out by somebody in such circumstances, and administered with integrity by a professional Insolvency Practitioner is extremely unlikely to fail.

Such, however, is the 'bandwagon' that has been created by the birth of the IVA factories, with their enticing 'wipe out up to 80% of your debts by using a little known piece of Government Legislation' that the 'industry' is bound to attract the 'less than scrupulous' element of society.

Whilst, yes, any 'debt management company' offering IVAs must have a qualified Insolvency Practitioner within their ranks, I doubt that many of their 'clients' will have had either a face to face, or even telephone, meeting with that practitioner. Nor will the majority of those 'clients' have had the less appealing aspects of an IVA, such as the possible effect of 'equity in their homes' fully explained to them, in order that they might make a fully informed choice.

It is, therefore, little wonder that there are so many 'failures' in an area which is supposed to give a definitive solution, and one where even one single failure should bring the whole area of IVA administration into question.

I am not anti IVA, perse. I did consider an IVA as an alternative to my own bankruptcy - I had a two hour meeting with an Insolvency Practitioner, but, as I had no guaranteed income, did not meet the criteria for an IVA, nor did I have sufficient 'realizable' equity to go down the route of a F&F IVA. In addition, my major 'creditor' was HMRC, who were not willing to listen to any offers.

In spite of all of this, I was pursued, both up to and after the date of my Bankruptcy Hearing by companies 'virtually guaranteeing' to get me an IVA.

I also accept, and appreciate, that there is a high rate of 'failure' in other 'debt solution' areas, including DMPs. Equally, though, many of these failures occur where a debtor has been incorrectly advised as to the best solution to their individual problem. A quick look through the DFW board will find many examples of wrong or misleading advice by fee-charging 'debt management companies' or their 'commission oriented' representatives.

It's one of those situations where there may be nothing wrong with the solution but the application of that solution leaves a lot to be desired.

Charco_2

Nobody doubts that a properly managed IVA can be an ideal solution for some debtors, in particular those for whom the only other solution would be full blown bankruptcy, where bankruptcy would have a serious effect on their lives, such as the inability to pursue their chosen career path, or the loss of their home. Indeed, an IVA taken out by somebody in such circumstances, and administered with integrity by a professional Insolvency Practitioner is extremely unlikely to fail.

That's a rather good post ROG, except in my opinion for this excerpt. The point of the failures for me is not that the IVAs were doomed to fail from the beginning, the failures are random, they were not congenitally defective. A "perfect IVA" does not really exist and i suppose each has as big a chance of failure as another - you're relying on things not going wrong!

I would expect for instance that the failure rates (that have levelled out around 30%) would increase in the next year or so as the knock-on effect of the recession hits home - like: "my IVA was affordable but then I lost my job!"

***NEDCAB, i have now seen the stats. Not much more than a damp squib for my tuppence worth. Suffice to say our in-house figures show less so we come in well under the average - not that THAT is much to brag about, "yeay we're better than average!". However, that said, I am proud of our company!***

North_East_Derbyshire_CAB

Hi Charco

Thank you for your reply (just spotted it)

Irrelevant statistic, clever implication, 'damp squib' - suppose that just about covers it.

Fair enough, respect your opinions.

NED-CAB

Charco_2

I don't know if you're being sarcky NEDCAB, but can you honestly say the stats add up to anything?

Fermi: "Will be interesting to see on Friday."
MrsTine: "have to say I'm looking forward to seeing those new stats tomorrow too"
Numpty: Lets stir everyone into a frenzy of anti-IP, IVA hatred...

But where is everyone?

It's a shame so many IVAs fail - I genuinely care a lot about my work and have such a feel good factor when it turns out I can help someone (whether through an IVA or advice on Bankruptcy or DMPs, or just listening to someone gripe for 20mins). HOWEVER, this analysis does not take into account any of the reasons IVAs have failed. It's a blind stat. I don't doubt a number of IVAs were a longshot from the beginning but some of them make it and some dont. Some of the failures include rock solid IVAs that went wrong through nobodys fault - do you haul an IP over the coals because a client lost his job or got his wife pregnant? (I actually read an IVA recently that had a Creditor Modification added to it that the debtor was not allowed to start a family in the next five years!)

The fact that some IVAs fail is not proof that IPs are money hungry crooks.

MrsTinks

Over on the thread where Fermi posted the stats maybe?

MrsTinks

BTW - I take it then that you work for an IVA provider? Just trying to work out your angle for being so pro-IVAs...

North_East_Derbyshire_CAB

Hi Charco,

Not at all trying to be sarcastic or point score for that matter (strange comment really taking into account what is in your signature).

The original post was ours.

You have commented and questioned figures in some depth on the original post (in our opinion) and to be fair have made some legit points.

We have only responded to the above, It is an open forum.

NED-CAB

Charco_2

MrsTine wrote: »

Over on the thread where Fermi posted the stats maybe?

My bad, i assumed he'd post IVA stats over on the IVA board, where he took great care to highlight their impending arrrival!

And anyway, the silence is kind of deafening over there too!