Banks force IVA figures down, but the number of people facing financial crisis keeps rising, says insolvency trade body
Predicting a 20% drop in the number of individual voluntary arrangements (IVAs) in the Government’s 3rd quarter insolvency statistics, R3 – The Association of Business Recovery Professionals – says this masks the number of individuals facing financial difficulty.
R3 believes that many creditors are cutting off the options available to heavily indebted individuals by demanding unrealistic returns from IVAs, and slashing the fees for Insolvency Practitioners so that many find it is uneconomic to continue to help debtors in certain cases.
Nick O’ Reilly, Vice-President of R3 said:
“In many cases when an individual is hopelessly insolvent, an IVA is the most suitable option for them. It means that they will not have to go bankrupt and risk losing their home, and they won’t be forced into an unreliable debt management plan, which could last indefinitely, and still result in bankruptcy.”
R3 predicts a rise in the number of bankruptcies next year, as individuals who are refused IVAs have no other option but to go bankrupt. The number of bankruptcies rose significantly at the beginning of 2007, but have remained steady since then. As it takes time for creditor action to have an effect we anticipate further increases in 2008.
Nick added, “The hurdle rates that some creditors are now imposing are in nobody’s interests. In most cases, if an IVA proposal is refused, the only option left available to the debtor is bankruptcy, which generally results in significantly lower returns for the creditors."
Source: creditman.biz.uk
Please post any news stories about IVAs here:
http://www.iva.co.uk/forum/default.asp?CAT_ID=5
See my Blog:
http://ivanews.blogs.iva.co.uk
