IVA Failure Rates

Depth_Charge

debt_doctor wrote: »

This is from a thread on the main board today...........

"I also called CCCS this afternoon and in between the tears, which I could not seem to stop , they finally sucumbed to giving me info about bankruptcy - as they have always been v. resistant to giving me this info, not recommending it."

This guy had no assets, but had a full time job, so potential of spare income.............

DD

Hi

Interesting

The new year beckons:)

Depth_Charge

UpToMyNeckInIt wrote: »

Regarding the 'Insolvency Review'. Thought you might like the view of an IP (taken from another forum):

'This has been on the cards for years, and will take some time to implement if it ever does - on an already very stretched Insolvency Service. It is fair to say that most of us don't feel that there will be much - if any - change on the regulatory front as a result of these steps.

One thing the Insolvency Service will never do is rule on fees. They will do their best to avoid such subjects, given their fear of disturbing competition - and it is widely known that fees are - and always have been - at the hands of creditors - so why need an external regulator for that? And anyone who thinks that IP fees are too high should try running an IP practice properly!'

...no reduction in fees likely then I guess, unless creditors start refusing IVA's from IPs charging more rather than less.

Hi

No mention of the dreadful termination rates then, they look worse every time you look at them if you ask me.

Something has to happen or IVAs could end up being no more and that wont help anyone.

The silence from DEMSA & DRF is getting a little deafening if you ask me.

Just my take of course

UpToMyNeckInIt

Depth_Charge wrote: »

Hi

No mention of the dreadful termination rates then, they look worse every time you look at them if you ask me.

Something has to happen or IVAs could end up being no more and that wont help anyone.

The silence from DEMSA & DRF is getting a little deafening if you ask me.

Just my take of course

That quote was from a firm claiming a failure rate of less than 5%.

There also seems to be an issue with some firms' fees apparently being 'percentage' based, ie: the more they can squeeze out of the debtor, the more money they make.

Another IP (big national firm) quoted the following:

'Our failure rate is not as high as those quoted and probably nearer 10%. However, I can understand why the rates of failure are high because some firms will try and squeeze every penny out of a client just to maximise fees which is short-termist in my opinion.

Also, variation fees are cut and sometimes not even allowed at all so going to creditors with proposed reductions and alternatives can be lossmaking and costly for the IP so some will take the cheaper option and just fail the IVA.

We try our best to get the IVAs to run their course and some are lossmaking for us. However, we have a duty of care to the client and the creditors and sometimes that has to be more important than basic profits.'

Tougher economic conditions would tend to suggest that more IVAs fail due to the more precarious nature of employment. Generally speaking most IVAs rely on a steady income for the term in order to service the payments.

I have some concerns over the apparent mis selling of IVAs. However, very often it seems, some people in serious debt find it hard to think straight and make reasoned judgement.

I understand the immense pressure and stress, and therefore it wouldn't surprise me if some are saddled with payments that are not sustainable in the long term but accepted by creditors. all this, just to get an IVA, because the company says it won't be accepted below a certain level (to an extent of course they may have a point, but in this scenario then, maybe the IVA is not the way forward).

Depth_Charge

UpToMyNeckInIt wrote: »

That quote was from a firm claiming a failure rate of less than 5%.

There also seems to be an issue with some firms' fees apparently being 'percentage' based, ie: the more they can squeeze out of the debtor, the more money they make.

Another IP (big national firm) quoted the following:

'Our failure rate is not as high as those quoted and probably nearer 10%. However, I can understand why the rates of failure are high because some firms will try and squeeze every penny out of a client just to maximise fees which is short-termist in my opinion.

Also, variation fees are cut and sometimes not even allowed at all so going to creditors with proposed reductions and alternatives can be lossmaking and costly for the IP so some will take the cheaper option and just fail the IVA.

We try our best to get the IVAs to run their course and some are lossmaking for us. However, we have a duty of care to the client and the creditors and sometimes that has to be more important than basic profits.'

Tougher economic conditions would tend to suggest that more IVAs fail due to the more precarious nature of employment. Generally speaking most IVAs rely on a steady income for the term in order to service the payments.

I have some concerns over the apparent mis selling of IVAs. However, very often it seems, some people in serious debt find it hard to think straight and make reasoned judgement.

I understand the immense pressure and stress, and therefore it wouldn't surprise me if some are saddled with payments that are not sustainable in the long term but accepted by creditors. all this, just to get an IVA, because the company says it won't be accepted below a certain level (to an extent of course they may have a point, but in this scenario then, maybe the IVA is not the way forward).

Hi

Interesting

But dont you think that most people in IVAs might as well just go bankrupt anyway (depending on circumstances and proper advice of course) as many end up doing so in failed IVAs after often paying thousands in fees (just look at the termination rates)

How many IVA companies help their clients when the IVA fails, what do they actually do when the their clients no longer pay into their IVAs do they assist with bankruptcy if this is the case?

I have done hundreds of IVAs to bankruptcy now and cant recall one where the IVA company have really helped.

If the the IVA companies could make as much money in fees advising bankruptcy as in the case of advising IVAs do you think things would be different.

Maybe the sales and marketing would be a little different?

Its all about independent impartial advice isnt it, not making money out of people in debt.

DEMSA and DRF, come on guys at least comment on the IVA failure rates, but hey, theres still the new debt management protocol, if it ever happens (oh and we will be keeping a close eye on those expenditure allowance trigger figures, got to be CFS havent they, after all, in the interests of independent, impartial advice, then how can they be anything else:)

DEMSA & DRF, those that can pay for debt advice should do, is this that what they are saying? if so, then what does this exactly mean given these dreadful IVA termination figures?

Just my take and opinions as always

Depth_Charge

Hi

Just had a read through the BIS written evidence sumbitted by the Debt Managers Standard Assocation (DEMSA) & The Debt Resolution Forum (DRF)

If you keep clicking at the bottom right of these reports there is more input etc, including from other agencies & organisations such as Fairpoint & Mind. They are interesting reads with some very good stuff in there to be fair. However, it could well be coach and horses me thinks with some other items. I cant see anything in any of them that mentions the IVA failure rates either, strange that given some of the other content - just my take though

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmbis/1649/1649we15.htm


http://www.publications.parliament.uk/pa/cm201012/cmselect/cmbis/1649/1649we17.htm

Depth_Charge

Depth_Charge wrote: »

Hi

Just had a read through the BIS written evidence sumbitted by the Debt Managers Standard Assocation (DEMSA) & The Debt Resolution Forum (DRF)

If you keep clicking at the bottom right of these reports there is more input etc, including from other agencies & organisations such as Fairpoint & Mind. They are interesting reads with some very good stuff in there to be fair. However, it could well be coach and horses me thinks with some other items. I cant see anything in any of them that mentions the IVA failure rates either, strange that given some of the other content - just my take though

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmbis/1649/1649we15.htm


http://www.publications.parliament.uk/pa/cm201012/cmselect/cmbis/1649/1649we17.htm

Hi again

Just had another read through the Debt Resolution Forum (DRF) link and found these two paragraphs....

4.2.7DRF believes debt management plans (DMPs) and IVAs are both intrinsically rehabilitative, as a consumer chooses to repay as much of their debt as they can afford, rather than walking way (which bankruptcy—whilst the consequences are drastic—usually allows).

4.2.8DRF believes that consumers should be rewarded for demonstrating that they can manage their money (in an IVA or DMP) by agreement from creditors to allow them access to financial products at prime rates. Bankruptcy and DROs should be available for the most vulnerable and those without property assets but should be as punitive as it is now (with a higher rate of Income Payments Agreements and Orders) to incentivise those debtors who can pay to choose a more rehabilitative (and productive for creditors) regime.

Well, what can you say?

Maybe agencies like the CAB should re-evaluate their advice strategy, perhaps they should advise more IVAs and Debt Management Plans instead of bankruptcies and Debt Relief Orders, thats of course if they have time in between dealing with failing and failed IVAs and Debt Management Plans.

Maybe the CAB should think about having an arm that charge those that 'can afford to pay' for debt advice or contemplate recieving a fair share contribution for debt management plans. Perhaps put CAB advisers on commission, but only if they hit their sales and profit targets of course.

Its a little tongue in cheek and just my take and opinions again as always.

Depth_Charge

Hi

Looks like we have an updated IVA protocol January 2013 style (coming in March 2013 it would seem) will it help stem the tide of terminations, no, probably not (the CFS seems to be still in there, wonder if its for cosmetic purposes only)

In the summary of changes boxes 10.8 caught the eye a touch given the title of this thread

http://www.insolvencydirect.bis.gov.uk/insolvencyprofessionandlegislation/policychange/foum2007/plenarymeeting.htm

I suppose incentives and rehabilitation could be the answers, it might be best to ask the DRF about those though, if I have read it right:) - I and a few others have had a read through the rest as well, oh dear me.

Anyway a little humour never does anyone any harm and the protocol has got to be worth a read for those considering an IVA as a method of dealing with their debts (or currently engaged in an IVA if appropriate)

Just my take again plus a few opinions

Depth_Charge

Hi

Well, early in the new year it may be, but I and others have already come across numerous enquiries concerning problems with IVA payments etc

Another one was proposals for an interlocking IVA where the clothing allowance suggested was £70 per month for a couple with 3 children - where those guidelines are is anyones guess - the couples income was made up of benefits only with £200 per month the bottom line disposable income figure according to the IVA companies calculations, no assets or property.

One of the couple had debts well below £2000

The last I heard they have not taken up the IVA

Hardly inspiring stuff given the IVA Termination rates and everything else thats going on.

UpToMyNeckInIt

Depth_Charge wrote: »

Hi

Well, early in the new year it may be, but I and others have already come across numerous enquiries concerning problems with IVA payments etc

Another one was proposals for an interlocking IVA where the clothing allowance suggested was £70 per month for a couple with 3 children - where those guidelines are is anyones guess - the couples income was made up of benefits only with £200 per month the bottom line disposable income figure according to the IVA companies calculations, no assets or property.

One of the couple had debts well below £2000

The last I heard they have not taken up the IVA

Hardly inspiring stuff given the IVA Termination rates and everything else thats going on.

Finally a post of yours I totally agree with!!!

Loads of people, in an IVA or otherwise, have money problems after Christmas though. How many of us got paid 'early' in December 2012, and now have to wait longer for pay in January?

In my opinion, an IVA is clearly not likely to be the right solution for people with no assets, and where their income is made up of state benefits. (Chances are, some of those benefits are 'means tested', so those people have already demonstrated they have little or no surplus income). In most of these cases, if a reasonable DMP cannot be worked out, BR or a DRO are both viable alternatives.

I would not be surprised if customers in this situation made up a significant proportion of IVA failures. (Is there any way of really finding out?). I suspect their IVA's are a great example of where this product has been mis-sold.

Not to worry though, I am certain that after PPI claims dry up, it wont be long before the same reclaim companies turn their attention to the issue of mis-sold IVAs. (I have been contacted by one such company already - even though I am quite happy with my IVA).

Depth_Charge

UpToMyNeckInIt wrote: »

Finally a post of yours I totally agree with!!!

Loads of people, in an IVA or otherwise, have money problems after Christmas though. How many of us got paid 'early' in December 2012, and now have to wait longer for pay in January?

In my opinion, an IVA is clearly not likely to be the right solution for people with no assets, and where their income is made up of state benefits. (Chances are, some of those benefits are 'means tested', so those people have already demonstrated they have little or no surplus income). In most of these cases, if a reasonable DMP cannot be worked out, BR or a DRO are both viable alternatives.

I would not be surprised if customers in this situation made up a significant proportion of IVA failures. (Is there any way of really finding out?). I suspect their IVA's are a great example of where this product has been mis-sold.

Not to worry though, I am certain that after PPI claims dry up, it wont be long before the same reclaim companies turn their attention to the issue of mis-sold IVAs. (I have been contacted by one such company already - even though I am quite happy with my IVA).

Hi

Thank you

You make some interesting and fair points again

Have you thought about taking up debt advice:)

PS - also, could it be, that at last, grudgingly maybe, you are biting the bullet and finally giving me a compliment?