This was on the BBC website
http://news.bbc.co.uk/1/low/business/7437966.stm
Firms warned on false IVA claims
The Office of Fair Trading (OFT) has warned 12 firms to stop making misleading claims to people who have declared themselves insolvent.
The firms have been sending unsolicited letters advising recipients to cancel their individual voluntary arrangements (IVAs) and to go bankrupt instead.
The OFT has threatened to fine or close down the firms if they do not stop their mailings.
It said scrapping an IVA could make someone's financial position worse.
"We expect any advice and/or information given to debtors to be in their best interests and it should include a full explanation of the implications of offers or advice," said Ray Watson of the OFT.
Harsh consequences
The letters were deemed misleading because they falsely suggested that the original IVA may have been mis-sold and that bankruptcy would be a better option.
HOW TO GO BUST
Bankruptcy: The traditional way of escaping overwhelming debt. Ends after one year, but you are likely to lose all your assets including your house to pay something to the creditors
IVA: A deal between you and your creditors, overseen by an insolvency practitioner. Less stigma, less chance of losing your home, but involves paying some of your debts in one go or over a number of years
The companies appear to have obtained the names and addresses of the insolvent people by simply looking at the public register of IVAs held by the Insolvency Service.
The OFT pointed out that if an IVA - an agreement to repay debts over a period of time - were scrapped in favour of bankruptcy this could have severe consequences.
It said the initial money spent on setting up the IVA would have gone to the insolvency practitioner to meet their costs, and so the original debt might not have been reduced.
And bankruptcy itself is a harsher option that could see someone lose their home as well as any remaining control over their finances or their ability to do business.
The regulator said it would not disclose at this stage the identity of the offending firms.
They have been given four weeks to respond and to change any of their advertising and marketing material.
