IVA failure/completion stats now released for 1987 - 2008

rog2

confused76 wrote: »

yes i also wondered why some of them were still running from 1988! :eek:

Many people are under the misconception that IVAs only last for five years. Most do, in fact, only run for five years and this is the figure that the IVA factories like most when 'advertising' their product.
They often fail to point out that many IVAs will run for longer, or that the length of an IVA could be affected by agreed (in very small print) release of 'equity'.
That said - I have never heard of a 20 year IVA. :eek:
The mind boggles - although perhaps not that of the IP who is 'earning' the fee. :rolleyes:

Charco_2

rog2 wrote: »

Many people are under the misconception that IVAs only last for five years. Most do, in fact, only run for five years and this is the figure that the IVA factories like most when 'advertising' their product.
They often fail to point out that many IVAs will run for longer, or that the length of an IVA could be affected by agreed (in very small print) release of 'equity'.
That said - I have never heard of a 20 year IVA. :eek:
The mind boggles - although perhaps not that of the IP who is 'earning' the fee. :rolleyes:

So this is where everyone is hiding...

Not exactly true ROG, generally speaking IVAs run for either 1 or 5 years (I've seen one or two for 3years - for people who would be retiring at that stage - but they are less common) However, three years used to be the norm! Phew, it's hard to keep up. I know of one IP who has had an IVA running for 17 years so, no, the 2 from 1988 aren't necessarily anomalies!

Your "small print" equity release jibe doesn't have much bearing either, everyone knows that if they have equity in their property they will have to realise it... this can affect the term of the IVA if the client is in a position to extend their payments by one year rather than remortgage to an unfavorable interest rate. BUt the again, Northern Rock are pushing for six year IVAs anyway with every proposal that goes through them...

rog2

Charco wrote: »

BUt the again, Northern Rock are pushing for six year IVAs anyway with every proposal that goes through them...

So why, almost without exception, do the IVA factories only state 5 years in their advertisements?

debtinfo

The most common term from all the cases i have seen is an initial 5 years plus clauses for extensions (and reductions) but they dont have to be

debtinfo

Have been looking round (as i have nothing better to do) and funnily enough none of the IVA companies seem to have this information on their industry news pages even though they have other updates for today. Also looking at their representative case studies none of them seem to have failed let alone 1/3rd of them, must have been a lucky run of good cases

rog2

Charco wrote: »

Your "small print" equity release jibe doesn't have much bearing either, everyone knows that if they have equity in their property they will have to realise it... this can affect the term of the IVA if the client is in a position to extend their payments by one year rather than remortgage to an unfavorable interest rate.

Actually, Charco, NOT EVERYBODY KNOWS THAT IF THEY HAVE EQUITY IN THEIR HOME THEY WILL HAVE TO REALISE IT, and that is one of the biggest criticisms that is leveled at the ever growing number of 'Debt Management Companies' who make a sizable profit out of selling IVAs.
Of course I can not state that the company that you represent would, deliberately or otherwise, hold back on such information when assessing potential clients for an IVA, but many do and it is not necessarily fair to expect that the 'debtor' is aware of this fact, or that he/she, when faced with what appears to be the ideal solution to his/her 'debt problem' is going to read through every clause in the 'small print' before signing the agreement.
There have been many instances, reported on this board, where representatives of such companies have not only placed undue pressure on the debtor, often in their own home, to sign the agreement before the debtor is fully aware of all of the implications. Along with other reported incidents of 'manipulation' of income/expenditure statements - designed to 'give the debtor more chance of securing an IVA' - yes I do feel justified in citing this as one example as to why the 'failure rate' of IVAs is so high.
You may see it as a 'jibe' - I can assure you it is not.

Charco_2

We'll have to agree to disagree on that one... i find it incredible that you'd argue that some people would think "oh i've got £25k equity in my house but I'll never be asked to contribute that towards my large outstanding debts... entirely unrelated!"
I find it incredible also that you would think it would be ok not to contribute the equity since the reason people could afford to have the equity anyway was by using their other loans and credit cards.

Anyway, that aside, if nobody is going to say anything interesting about the actual stats other than to sling mud at IPs and IVAs maybe I'll start (i'll admit there is very little that can be deduced from the stats other than a level of failures of around 30%).

I think it is interesting that somewhere under/something up to 10% of the IVAs (ie one third of all failures) fails within the first year or so. For me that is an indication that maybe the IVAs were not affordable in the first place.

debtinfo

Being constructive that would point towards 2/3s being because of a later change of circumstances, although 10% of the total possibly being because they were unafordable is still a lot. there is room there for greater expanation at the start. From personal experience of the ones that have failed i often ave heard that it starts out as an affordable amount but at the creditor meetings it gets pushed over the edge by creditors and the insolvent feels that they have no coice but to accept.

Also it might be a good idea for individual companies to publish their failure rates as a comparison to the industry average

Charco_2

Now we're getting somewhere.

10% is a rather large figure but as you say, the IP draws the proposal and gives their recommendations BEFORE the Creditors get their hands on it and start to squeeze the pips so to speak for the crediotrs meeting. A few £s on a modification here, a few £s there...

blind-as-a-bat_2

Charco wrote: »

We'll have to agree to disagree on that one... i find it incredible that you'd argue that some people would think "oh i've got £25k equity in my house but I'll never be asked to contribute that towards my large outstanding debts... entirely unrelated!"
I find it incredible also that you would think it would be ok not to contribute the equity since the reason people could afford to have the equity anyway was by using their other loans and credit cards.

Anyway, that aside, if nobody is going to say anything interesting about the actual stats other than to sling mud at IPs and IVAs maybe I'll start (i'll admit there is very little that can be deduced from the stats other than a level of failures of around 30%).

I think it is interesting that somewhere under/something up to 10% of the IVAs (ie one third of all failures) fails within the first year or so. For me that is an indication that maybe the IVAs were not affordable in the first place.

Maybe the word 'unsecured' in the agreemant has something to do with why people think that, after all the creditors dont advertise 'you may lose your home if you dont keep up the re-payments' on unsecured loans.

Not everyone is educated enough in finance to realise the implications of unsecured debts, and the creditors are in no way inclined to educate them