Past Articles for the IVAs Category

applying for Individual Voluntary Arrangements (IVAs), it has been claimed.

According to the UK Insolvency Helpline, fewer homeowners are being denied the option of entering an IVA because the value of their property exceeds their total debts.

However, as house prices continue to fall, an increasing number of property owners with serious debt problems are deciding an IVA is the most appropriate solution to their financial woes.

The situation has been welcomed by the National Money Advice organisation, which has described the fact that homeowners are sometimes rejected access to IVAs as being “comparable to cancer patients being denied chemotherapy because there weren’t ill enough”.

According to data from the Credit Action charity, one person in the UK enters insolvency or bankruptcy every four minutes.

Written by Giles Stevenson

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A warning has been issued by the Office of Fair Trading (OFT) over the growing number of businesses trying to exploit the financial vulnerability of insolvent individuals around the country.

The OFT reports that a number of companies have been identifying people who have entered an Individual Voluntary Arrangement (IVA) and trying to entice them into what is often an unfavourable bankruptcy deal.

According to the OFT, marketing efforts have been targeting people who are already insolvent and whose financial position is likely to be made worse if they break the terms of their existing debt management plan.

Ray Watson, OFT director for consumer credit, said: “Tackling companies who are engaging in unfair business practices by targeting vulnerable consumers with misleading advice and information, particularly if it leads to consumers becoming more over-indebted, is a key priority for the OFT.”

Data from Credit Action has shown that one person in the UK is declared insolvent or bankrupt every four minutes.

Written by Dan Mather

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Appeals for debt help among people in South Yorkshire could be set to double over the course of this year, it has been claimed.

UK Consumer Debt Line is convinced that more and more people in the area are suffering with unmanageable personal loan and credit card debt and thousands are seeking help with their problems.

The lending criteria being implemented by financial services firms since the start of the credit crunch means that millions of Britons are being squeezed financially and for some the issues get out of control, according to the organisation’s founder Tony Wilkinson.

He told the South Yorkshire Star: “Last year there were 870 insolvencies in Sheffield, 586 in Doncaster, 512 in Rotherham and 480 in Barnsley.

“The credit crunch is a big worry and there could be twice as many insolvencies this year.”

Last week, figures released by the government showed that more than 15,000 people in England and Wales declared themselves BANKRUPT during the first three months of this year.

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The true extent of the debt problems facing consumers across Britain is being hidden by the official insolvency figures, it has been claimed.

According to the Association of Business Recovery Professionals (R3), the data on insolvency is not representative of the country’s financial problems because it does not take account of the people who enter a debt management plan.

There are thought to be tens of thousands of Britons entering a debt management plan each year but they are not included into the official Insolvency Service figures, R3 explains.

Reflecting on the scale of the UK’s debt woes, R3’s president Nick O’Reilly said that the worst is yet to come and noted that the vast majority of his members agree with this prediction.

Meanwhile, Anna Sofat, founder of the financial planning firm Addidi Wealth, suggested that the number of Britons being declared bankruptcy is likely to continue to increase over the course of 2008.

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More than 25,000 people from England and Wales entered insolvency over the course of the first three months of this year, according to the latest official data.

The figures show that there were 15,651 cases of bankruptcy and 9,614 reported instances of people entering an Individual Voluntary Arrangement (IVA) by way of a debt solution.

Overall, bankruptcy levels were roughly the same in the first quarter of this year as the final quarter of 2007 but IVA rates increased by 4.3 per cent on the same comparative basis.

The Insolvency Service reports that the latest data represent a reversal of the trend during the past year that saw insolvency rates falling on a quarterly basis.

In addition to insolvency, the prospect of repossession is becoming increasingly real for many British consumers, with the Centre for Economics and Business Research forecasting recently that 25 per cent more homes will be lost in the UK this year than in 2007.

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A total of around £25 billion worth of unsecured personal debt that may not be paid back is currently outstanding in the UK, it has been claimed.

Research by the credit risk management group TDX has shown that there are around one million people in a precarious financial situation and the bulk of the arrears is believed to be accounted for by credit card debt.

As a result of these issues and the ongoing economic downturn, the group has also estimated that there will be almost twice as many people entering an Individual Voluntary Arrangement (IVA) this year than was the case in 2007.

TDX’s analysts concluded that “A slowdown in house prices and an increase in personal inflation, which offsets any relief from interest rate reductions, will lead to an increase in the number of people in financial difficulty.”

Accountancy firm Grant Thornton predicted earlier this year that around 110,000 British consumers would enter an IVA in 2008.

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The credit crunch that has been causing turmoil in financial markets around the world is about to hit home with consumers in the UK, it has been suggested.

According to the Guardian’s economic expert Deborah Hargreaves, the problems that have been giving financiers nightmares will become a painful reality for thousands of families in weeks to come.

The practices of lenders in recent years has been singled out by Ms Hargreaves as being among the major reasons why millions of people are struggling to become debt free and why they are so vulnerable to an economic downturn.

Ms Hargreaves commented: “The financial engineering of recent years enabled banks to lend ever-increasing amounts since they were able to offload debts from their balance sheets.”

“The banks’ easy lending practices fostered a debt-dependant culture,” she added.

Accountancy firm Grant Thornton expects to see around 10,000 Britons enter insolvency every month this year as the impact of the credit crunch is felt across the country.

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The rate at which Welsh consumers are resorting to Individual Voluntary Arrangements (IVAs) is increasing dramatically, according to the latest data from the Insolvency Service.

Since 2000, the number of people in Wales entering an IVA on an annual basis has risen by as much as 446 per cent and bankruptcies have increased by 168 per cent during the same period.

In response to these findings, the Liberal Democrat MP for Cardiff Jenny Willott suggested that more needs to be done to raise “financial literacy” rates among people living in Wales and that prime minister Gordon Brown has to take responsibility for the scale of the current problem.

“Now that the economy starting to slow, high interest rates are hitting an increasing number of Welsh families who have borrowed heavily to meet the rising cost of living and spiralling house prices,” said Ms Willott.

“This is the seventh consecutive year that the number of bankruptcies and IVAs in Wales has grown.”

Earlier this month, the Bank of England opted not to reduce the base rate of interest having done so by a quarter-point in February.

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It looks like Cleardebt, and our clients and website users, may have played a part in changing banks, credit card and loan companies’ attitudes to IVAs for the better. Last year the following public petition was posted on the Downing Street website.

“We the undersigned petition the Prime Minister to Bring about a fair balance between the rights and responsibilities of consumer debtors and their bank and financial institution creditors, and enable as many people in debt as reasonably possible to have fair access to the full benefits of insolvency legislation by bringing in a) legislation to enforce the Banking Code and b) at least until that is in place, relaxed best practice requirements in relation to the IVA personal insolvency procedure to take account of the bank’s present actions.”

The petition got 553 signatures and, whilst we can’t be sure, it looks as if around 400 of them came from people who followed links from our email newsletter.

If you were one of those who signed, then we think you played a part in helping put pressure on lenders to support IVA reforms which should ensure more people get the debt resolution they need in 2008. Here’s the prime minister’s office’s response (posted to their website on 29th February 2008):

“The Government is fully committed to ensuring that individuals in financial difficulty are able to deal with their debts, whether through formal statutory procedures such as bankruptcy or IVA, or informal debt management processes. This in itself recognises that there must be a fair balance between rights and responsibilities of debtors and creditors.

In terms of IVAs, the Government has sought to apply legislative change where improvements could best be achieved in that way. The proposed introduction of Simple Individual Voluntary Arrangements is an example of this. However, at the same time it recognises that it is better in many cases to seek agreement between the various parties as to how insolvency procedures should work in practice, within the legal framework.

To this end a draft protocol was finalised and agreed at a forum held on 29 January 2008, and took effect from 1 February 2008. The protocol makes it clear what is expected of both creditors and debtors and removes some of the uncertainty about what constitutes best practice within the IVA process.

The presentation to delegates at the forum and a full copy of the protocol and associated documents can be found on the Insolvency Service website.”

Source: http://www.pm.gov.uk/output/Page14797.asp

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As many as seven million British consumers are struggling to meet their debt repayment commitments, according to recent research.

Figures compiled on behalf of accountancy firm KPMG show that almost one in four people around the country find it difficult to pay off the debts they owe to creditor on a monthly basis.

Additionally, a recent poll by YouGov established that close to 11 million people are convinced that their debt problems are likely to worsen over the next few months.

In light of the latest data on the UK’s debt management woes, the company has reiterated its prediction that a record number of Britons will enter an Individual Voluntary Arrangement (IVA) or file for bankruptcy this year.

“Those people who have been robbing Peter to pay Paul, transferring balances from card to card, re-mortgaging and taking equity out of their property to pay off spiraling debt are fast running out of options,” said Steve Treherne, a personal insolvency practitioner at KPMG.

ClearDebt recently asserted that an agreement on protocols between the Insolvency Service, the British Bankers’ Association and debt solution firms is likely to resulting more IVAs being entered in 2008 than was the case last year.

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