The Debt Clinic
Let's Make Your Finances Better
- Debt Management News (40)
- IVA News (9)
- Remortgage News (12)
- Loan News (19)
- Trust Deed News (3)
- Credit Check News (6)
- Latest News
- Most Popular Articles
Post New Article
Easy Product Advisor
Which solution is right for you?
Our test will give you an unbiased look at which service can help you
New Code Agreed to Govern IVAs
The government has unveiled a new industry code which aims to give more protection to people who have taken out an Individual Voluntary Arrangement (IVA) to handle their debts.
The voluntary code of conduct was thrashed out by a working group made up of IVA providers, creditors, consumer representatives and officials from the Insolvency Service.
Under the code, debtors have to make a standard statement, detailing income and outgoings, while checks by insolvency firms will be more stringent.
Before recommending an IVA, debtors will be urged to try and make an informal agreement with their creditors and there will be an agreed point when debtors who fall behind with their payments are deemed to have broken the terms of the agreement.
Also, any lender that rejects a proposed IVA must give a reason why.
Government minister, Pat McFadden, said, "It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format.”
An IVA is a voluntary legal agreement, valid in England and Wales, under which debts are frozen in return for the borrower agreeing to repay a fixed amount every month.
Payments are made monthly and the process usually lasts five years. After this, any outstanding debt is written off.
IVAs are meant to provide an alternative to bankruptcy but have proven controversial.
Debt advice groups have warned that they are being marketed too aggressively, with many new companies springing up to manage them, often charging hefty fees.
Moneysavingexpert.com founder, Martin Lewis, said, “The IVA industry has grown quickly and been hugely profitable, some companies making £5,000 a pop per IVA.”
"Hardcore promotion has brought in many unwary consumers falling for the sell of 'a loophole to wipe 75 per cent off your debts', yet the reality is that IVAs are a cut down version of bankruptcy, suitable for only a few.”
IVA News posted on 11 April 2008
