Plans to ease IVA conditions under fire

[IVA News]

Plans to ease IVA conditions under fire

EXPERTS have slammed plans to make it easier for people in serious debt to write off part of the money owed using an individual voluntary arrangement (IVA).

The proposals, put forward by the Insolvency Service, would mean only 50 per cent of creditors would need to give their agreement before an IVA can be approved, down from 75 per cent under the present set of conditions.

However, Keith Stevens at accountancy firm Wilkins Kennedy said: "The number of personal insolvencies is continuing to soar.

"Too many borrowers now view both the bankruptcy and IVA procedures as a bit of a soft touch, so removing the ability of creditors to reject or tighten up the terms of an IVA that they feel is too lenient seems like the wrong thing to do at the wrong time." An IVA is an agreed monthly payment scheme, usually spanning five years, after which the balance of debts is written off.

Recently many lenders have been tightening up on whom they approve for an IVA by only accepting those who can pay back at least 40p in the £1, rather than the typical IVA agreement which requires paying back only 25p in the £1.

Source: the daily express

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[chris_]

Having seen many posts on this forum with regards creditors and their increase in tougher attitudes to accepting IVA's, and the fact that many of the debtors on this forum are in trouble due to consumer debt rather than business debt, you would think that introducing the SIVA would make creditors hostile.

However, if the recent figures discussed elsewhere about the number of rejected IVA's resulting in bankruptcy are correct (just 3%) then by being tougher on debtors, creditors will surely get on average more in accepted IVA's and the rejected IVA's on mass seem to result in DMP's in which case they will get more back here as well.

The point I am making is that introducing the SIVA will undoubtedly increase the number of IVA's, but presumably creditors will maintain their tougher stance as well, thus maintaining balance for creditors.

The fact that there is a 50% vote will result in a fairer balanced view from creditors, and let's face it most of the debts are with the larger banks and credit card companies etc, who will still control the vote.

Creditors may even start taking an even tougher line en masse and start demanding minimum 50% pay outs.

The main concern I would have as a creditor would be losing the ability to make modifications to proposals - my iVA had 20 and while being a bit over the top allowed my creditors to maximise the benefits of the IVA to them.

My main concerns as a debtor would be that to avoid repeated refusal of proposals, an IVA would have to be seen as giving a substantial return to creditors or it is just going to be refused - (as creditors will know that forcing you into a DMP will benefit them as well) - only bankruptcy will result in creditors losing out, and at only 3% they know they have us all by the short and curlies.....

Chris.