But unfortunately these companies are making money - so there are either a lot of people unhappy or confused about their IVAs due to poor initial advice - or they see that bankruptcy is an easier option, and are quite happy to be led to that pasture by the effectiveness of this style of marketing.
Andy Davie reported on this forum some time back, that the IVA Council had flipped 2000 debtors from IVAs into Bankruptcy in one year sending out letters from details obtained from the Insolvency Register. The IVA Council or whatever they are called now are one of around 20 companies who operate this way, so the maths here is quite easy.
No Company can possibly know the financial details of any debtor and can state for sure they have been mis sold their IVA, however 2000 is alot of unhappy debtors and at £1000 per time is £2 million in fee income for the IVA Council, add on the court and OR fees another £1.2 million then compare that to IP fees of £15 to £20 million had the IVAs ran their full course, it is very easy to understand this upsets alot of people, mainly IPs, who have spent a fortune attracting this business, however the 2000 debtors who have perhaps saved an enormous amount of money and are protesting not.
Your IP fees are vastly overestimated Major as very few pay between £7,500 and £10,000. Furthermore you do not take into account the IPOs/IPAs that would be granted against these 2000 clients and the fees then picked up by the bankruptcy industry. Finally, you do not factor in the number of people who used these companies and subsequently lost their homes because the advice was totally wrong. These people cannot go back to an IP firm for help because of what they did during their first IVA and are left out in the cold. These people want to protest but cannot because they believed the lies of conmen and charlatans over the professional advice of their own IPS.
Who are they going to complain to when the 'bankruptcy assist' company has lost it's licence and been wound up?
Well said Michael. I bet not all of those 2000 people were better off going BR - I expect in a lot of cases the only ones who end up better off are the so called 'BR assist' companies who trawl the insolvency register.
I do not accept that my IP fees are vastly overestimated I have used the total fees payable by the client including nominee, supervisor and dispersments the fees payable by the debtor, I have not taken into account IPA IPO orders but I have also not included the amount payable by the debtor in the IVA. Yes I have not factored in my letter details of clients who have lost their homes due to bad advice from conmen and charlatons as you call them because I cannot say they are not out there but I have yet to hear of any
But surely the fact the IVA Council and other companies like it are no longer able to trade says something about the quality of their so called advice?
I think I may have missed that one, why are the IVA Council and other companies like it unable to trade this current thread is about letters from Integrity and Jefferson they are current letters are they not, the IVA Council fell out with an IP and got sued, quite rightly, I am not aware of any issues with their clients or reasons they can no longer use the register or trade
Hi Major.
I have no problem with companies assisting people with the bankruptcy process and being paid a reasonable for the work. My problem lies with companies that mailshot vulnerable people with official looking headed paper and frighten them into taking a decision which conflicts with best advice.
We, like I am sure do most firms, spend a lot of time interviewing every client and the majority do not opt for an IVA. Luckily very few of our clients have heeded the letters sent out by these firms so feewise they are inconsequential. However, we do have to spend time explaining to our clients that these companies are not actually run by government and that their IVAs are safe. At one time we had to send out a letter to all our clients with a copy of a warning letter issued by the Insolvency Service to ensure our clients were not mislead by firms operating at this time.
There are certainly perfectly reasonable and professional outfits who provide a good service to their cleints but there are also cowboys exploiting the vulnerable and these are the ones I object to.
Your view of the average fees charged in IVAs The Major is seriously out of date. My average fees for acting as Nominee and Supervisor - often over a 6 year period are around £5,100. On the basis that I work on a lot of self-employed cases which generally command a higher fee, then this is keeping my averages above those firms who have a more volume approach and will be suffering from much lower averages.
I love a healthy debate on this forum, but let's debate with the correct facts where we can.
Hi
Many people that I speak with often dismiss the bankrutcy option straight away even if it is often the quickest and most cost effecrtive. I guess when they are a year or two into a tough IVA they may just feel like throwing the towel in and declaring bankruptcy and this may happen when they are contacted by bankruptcy assist firms. It doesn't always mean that they were misold an IVA.
My view is that there is a need for bankruptcy assist companies as long as they offer correct and honest advice, there have been very high fees in the past for IVAs, that can't be disputed, but now these fees are more than reasonable. I also do not think that the Insolvency Register should be open to all and sundry. Maybe only companies that can demonstrate a good track record and compliance can be granted access.
Regards
I agree with most of what you say wholeheartedly Andy - but having practiced for over 25 years, we always managed terribly well without bankruptcy assist companies in the past. They have sprung up as a result of volume IVA marketing and selling - and perhaps some of those services were mis-sold, but I share your view that the majority of people who are lured into paying for a service they may not really need is lethargy at their arrangement and a quick way out of it.
In the very minimal number of cases I have lost as a result, it is clear that those people did not want to pay their money to their creditors any longer. Perhaps the OR's decision to take full IPO payments from people will deter some from this - and perhaps more supervisor's of IVAs which fail in this manner - knowing that their clients can well afford to meet the payments - will seek the appointment of Trustee in bankruptcy to ensure an IPA or IPO is in place.
The figures I have quoted are from a period of 2008,when the IVA Council quoted they had flipped 2000 clients in one year,as reported by Andy on this forum if those IVAs then go as far back as 2004/5 I feel that these figures require no adjustment on my part, I like you enjoy a healthy debate so I try to be accurate, although I certainly agree that they were the glory days and fees since that time have become leaner as the industry has expanded and the arrival of TIX
You do however bring an interesting point to the table regarding lethargy in clients who no longer want to pay their IVAs. I think we will agree that although at present only two out of three IVAs go the full course when they fail they are a very expensive failure to the client. I believe they fail because they become unaffordable, many people can get used to being penniless for six months to a year, but five to six years is maybe a price to pay for the debtor but is it a price for the debtors family to have to bare also. You mention about the IP being appointed as trustee in bankruptcy, upon the failure of the IVA,I see no issue with this as there is no dividend to meet, no threat of failure and the IPO/IPA is terminated when excess income is no longer available with guranteed closure,
Finally with the arrival of bankruptcy Assist Companies I will be the first to admit this is a procedure that with care attention and seeking of information it is a procedure well within the means of the average person completing themselves, however as I have said before on this forum that an IP has a legal responsibility to act in the best interests of the creditors at all times, bankruptcy assist companies only ever act or should act in the interests of the debtor, we are on opposite sides.
Well I don't know about your figure of 66% of cases failing to run their course - I can only speak for my own practice where over 90% of my cases conclude successfully.
Perhaps that is because we go to great lengths to ensure that our clients payments are affordable - in the short and the long term. With the flexibility also now afforded by the IVA protocol, I am sure overall failure rates will come down - until of course the Treasury start dabbling with interest rates - and that is of course outside all of our control!
I stated that only about two out of three cases run the full course about a 30 % plus failure rate however with present climate and the future jobs market it would not suprise me that a 60% plus failure rate may be not too far away
