An IVA as an alternative to bankruptcy has massive attractions but the IVA has had a bad reputation – until now.
The IVA as a debt management strategy has been criticised in the past. Some critics of the IVA felt some insolvency practitioners were heavy handed in their sales tactics, with little regard to whether the debtors could pay the arrangements or not. All of this has given the IVA a poor image, whereas in fact, it can be a very appealing alternative to bankruptcy.
IVA – The softer alternative
And now, the IVA has had a make-over. The British Banker's Association has put together a code of conduct to govern the sale of IVAs. The British Banker's Association's code includes:
• A set of rules to define fair sales tactics for IVAs
• The substitution of large up-front fees for an IVA to be substituted with smaller charges spread over 3 to 5 years.
Fairer fees for IVAs
As fees fall for IVAs, competition to sell the financial product will increase - which is good news for customers seeking out an IVA. The new rules have been described as a "radical overhaul" for IVA providers. An IVA can be a viable alternative to bankruptcy in that somebody heavily in debt can have as much as three-quarters of that total debt written off by the lender, the rest is paid back by a fixed repayment schedule. By spreading the fee to the insolvency practitioner over the repayment period rather than having one big up-front fee, it means there is a bigger incentive for the IVA provider for their customers to stick to it. The hope is that this means only those who are suitable for an IVA and who are likely to afford an IVA will be sold an IVA.
Varden Nuttall has been established for over 15 years and is dedicated to helping people in financial difficulty find a debt management solution through an Individual Voluntary Arrangement (IVA). Employing 90 people, including trained and skilled IVA administrators, we are one of the largest IVA companies in the UK and handle over 3% of all IVA applications. To find out more about the company, or to make an appointment to talk about putting an IVA in place, call us today on 0800 031 9802 or fill in our online enquiry form.