DEBT RESOLUTION FORUM BELIEVES ACCESS TO IVAS STILL BEING HELD BACK BY BANKS AND CREDIT CARD OPERATORS

The Debt Resolution Forum (DRF), representing 35 of the UK’s leading debt resolution firms, today (22 December) warned that consumers struggling with their debt were still being denied an IVA solution by a small minority of banks and credit card companies.

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DEBT RESOLUTION FORUM BELIEVES ACCESS TO IVAS STILL BEING HELD BACK BY BANKS AND CREDIT CARD OPERATORS

 Creditors restrict access to IVAs
 Debtors contributions forced up by creditors

The Debt Resolution Forum (DRF), representing 35 of the UK’s leading debt resolution firms, today (22 December) warned that consumers struggling with their debt were still being denied an IVA solution by a small minority of banks and credit card companies.

DRF welcomed the review of the IVA protocol published by the Insolvency Service – but said this clearly showed that certain creditors were putting obstacles in the way of insolvent debtors getting Individual Voluntary Arrangements, where IVAs were appropriate advice. Fees for IVAs have also now been reduced by most creditors to such an extent that debtors with low disposable incomes are also being denied effective debt resolution.

Commenting, DRF chairman and CEO of debt resolution company, ClearDebt, David Mond, said:

“The Insolvency Service’s study shows that six out of ten IVAs are now protocol compliant – but that creditors are still submitting modifications in 97% of cases. The protocol was designed to simplify the process of consumers getting the debt solution they need, clearly creditors have not yet fully got the message.

“Creditors are, on average, submitting nine modifications in each protocol-compliant IVA and are usually trying to further drive down fees or push up debtor contributions – despite the fact these are now calculated according to agreed guidelines as outlined in the IVA Protocol.

“The Insolvency Service’s review showed that debtors are happy with the IVA process and the service they receive.

“Eight out of ten had used another debt solution before choosing an IVA and half of those chose an IVA because they want to repay their creditors what they can realistically afford.

“DRF believes it is time for creditors to recognise that the IVA process is one that involves future customers, rather than permanently delinquent debtors and that they should not frustrate access to the IVAs.”

DRF believes that it is essential that the IVA Protocol should be fully reviewed in the next twelve months – to ensure pressure continues to be put on that minority of creditors not to frustrate the process. Fees to Insolvency Practitioners have now been driven so low that some debtors cannot be offered an IVA when it is the most appropriate solution.

“IVAs represent excellent value to debtors and creditors now” says Mond, “and creditors should recognise that debtors who choose IVAs are highly motivated to repay as much as they can afford – the process should not be frustrated because creditors want to drive Insolvency Practitioner’s fees well below the value of the time involved in setting up and running the arrangement”.

- ENDS –
For further Information:
   
Andrew Smith  Mobile:  07912 407 532
  Office: 0161 969 2030
 
  Email: [email protected]

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