www.iva.co.uk

By far the best coverage in the National Guardian! IVA are on the raise...the Guardian ran a half a page on page 18 with the experts weighting in there - David Mond from DRF, Alan Tomlinson as IP and the R3 head.And CCCS.....

1 in 60 going for Insolvency. Even though only .4 of a percent of people are Insolvent in the UK.

Insolvency rate have beaten the 90s and will reach dizzy heights in 2009. In a sentence from one of the experts "never seen so many people or businesses go to the wall"

And Brown tells us - "Britian is in a better position to weather the fianacial storm as the UK has low inflation, low debt and good GDP" He forgot to metion HIGH personal debt.

For those of you that missed it here is the full article:

Personal bankruptcies hit new record
Larry Elliott, economics editor, and Phillip Inman
guardian.co.uk, Friday 6 February 2009 20.22 GMT
larger | smaller


[purple]Firms dealing with Britain's debt problems warned tonight that one in 60 people were facing insolvency after the latest government figures showed that a collapsing economy led to record personal bankruptcies and a 50% jump in company failures late last year.
Industry specialists said the sharp rise in individual and corporate financial distress reported by the Insolvency Service for the last three months of 2008 was "the tip of the iceberg" and that rising unemployment and the credit crunch would deepen the debt crisis this year.
Official figures released today showed that the steepest economic decline in almost 30 years led to 19,100 people being declared bankrupt – a 22% increase on the fourth quarter of 2007.
A further 10,000 people took out individual voluntary arrangements (IVAs), under which interest on debt is frozen in exchange for set repayments each month. The total of 29,444 people being declared insolvent was up 18.5% on a year earlier and is already running at higher levels than during the recession of the early 1990s.

David Mond, chairman of the Debt Resolution Forum, the trade body for IVA and debt resolution firms, said: "The government's figures, showing that one in 400 adults became personally insolvent last year, are the tip of the iceberg. "Not only are there an estimated 110,000 people currently in individual voluntary
arrangements, but there are probably more than 700,000 people in informal debt management plans – and these are just the people who have decided to deal with their unsustainable debt, hundreds of thousands more are probably still struggling on. "This means that 1 in 60 adults in England and Wales are dealing with unmanageable
debt – nearly seven times the government's figure."

The 1.5% contraction in the economy in the wake of the financial market mayhem last autumn also claimed 4,607 companies – a 52% increase in liquidations on October-December 2007.
Economists warned that the level of bankruptcies was set to increase as unemployment rose and the problems caused by the credit crunch meant people were no longer able to borrow their way out of trouble.
Lending figures for December showed an increase in the number of people shifting their debt to personal loans and credit cards, many of them with higher interest rates than a year ago as banks increased the cost of unsecured lending. Financial advisers warned that this move, coupled with a clampdown by lenders on customers to extending their mortgages, was likely to increase further the pressure on people with high levels of debt. Alan Tomlinson, a partner at the licensed insolvency practitioners Tomlinsons, said: "I
have been an insolvency practitioner for over 25 years and have never seen so many companies, from all sectors, going to the wall.
"Trading conditions have never been so tough and given the bleak economic outlook, it could be some time yet before they begin to improve. "The appalling economic conditions are claiming more and more victims, as companies in all sectors make redundancies or simply fail. "What is especially interesting is that more people have gone down the bankruptcy rather than the IVA route, which is a reflection of the fact that lenders have tightened up the criteria for the acceptance of IVAs."

Many customers have also avoided bankruptcy and an IVA following a trend among banks to offer debt management plans, which can delay repayments or spread them over a longer period. These plans, like IVAs, often fail and debtors are forced into bankruptcy at a later date. The Consumer Credit Counselling Service recently said it received record numbers of calls to its helplines in the first two weeks of January. The Insolvency Service figures also showed a 75% jump in the number of people declared insolvent in Scotland during the final quarter at 5,807, although the figure was slightly down on the total for the previous quarter. In Northern Ireland insolvencies increased by 39% year-on-year to 443 during the three months to the end of December. Nick O'Reilly, president of the insolvency professionals' trade body R3, said: "What today's figures mean is that in 2008 we saw a staggering 350 people becoming insolvent
in the UK every day. For 2009 our members believe this number will reach in excess of 430 people a day for the whole of the UK.
"The outlook is bleak for the next two years, when insolvency practitioners expect to see in excess of 158,000 personal insolvencies annually. "We'll start to see the knock-on effects of increasing business failures and redundancies on personal financial situations," he said. Personal bankruptcy hit a record level and company failures soared by 50% as the collapse in the economy in the final three months of 2008 took its toll, official figures showed today. Data from the Insolvency Service revealed that the steepest decline in output in almost 30 years led to 19,100 people being declared bankrupt - a 22% increase on the fourth quarter of 2007.
A further 10,000 people took out individual voluntary arrangements (IVAs) under which interest on debt is frozen in exchange for set repayments each month. The total of 29,444 people being declared insolvent was up 18.5% on a year earlier and was higher than during the recession of the early 1990s. The 1.5% contraction in the economy in the wake of the financial market mayhem last autumn also claimed 4,607 companies - a 52% increase in liquidations on the October
to December period of 2007. Economists warned that the level of bankruptcies was set to increase as unemployment
rose and the problems caused by the credit crunch meant people were no longer able to borrow their way out of trouble.
Howard Archer, chief UK and European Economist at IHS Global Insight, said: "Unfortunately, the marked rise in the number of individual insolvencies in the fourth quarter of 2008 is a harbinger of what is very likely to be seen through 2009. "Deep economic contraction, sharply rising unemployment, higher debt levels, lower
equity prices, and more and more people being trapped in negative equity will exact an increasing toll over the coming months.
"While the substantial cuts in interest rates by the Bank of England will obviously help some people, they are likely to be insufficient to save many from insolvency."
Alan Tomlinson, partner at licensed insolvency practitioners Tomlinsons, said: "I have
been an insolvency practitioner for over 25 years and have never seen so many companies, from all sectors, going to the wall. Trading conditions have never been so tough and given the bleak economic outlook it could be some time yet before they begin to improve.
"The appalling economic conditions are claiming more and more victims, as companies in all sectors make redundancies or simply fail.
"What is especially interesting is that more people have gone down the bankruptcy rather than the IVA route, which is a reflection of the fact that lenders have tightened up the criteria for the acceptance of IVAs." The Insolvency Service figures also showed a 75% jump in the number of people declared insolvent in Scotland during the final quarter at 5,807, although the figure was slightly down on the total for the previous quarter. In Northern Ireland insolvencies increased by 39% year-on-year to 443 during the three months to the end of December. Nick O'Reilly, president of insolvency professionals' trade body R3, said: "What today's figures mean is that in 2008 we saw a staggering 350 people becoming insolvent in the
UK every day. For 2009 our members believe this number will reach in excess of 430 people a day for the whole of the UK. "The outlook is bleak for the next two years, when insolvency practitioners expect to see in excess of 158,000 personal insolvencies annually.
"We'll start to see the knock-on effects of increasing business failures and redundancies on personal financial situations."


A very bleak picture and one which Brown has no idea how to sort out!

Does anyone have figures for actual success rates of IVA's getting completed??

Interesting point - I think the very early cases from 3 or 4 years ago were few and far between but it is still too early to get any reasonable data through.

It would surely be more important for IVA firms to clearly state a success rate in completed IVA's than telling everyone how good they are at getting them approved in the 1st place,or telling everyone how much they can get written off!!

I'd be interested to know how many actually get to completion as well.

We do see some on here, but we seem to hear more from people who's IVA's are in danger of failing, or have failed.

Hi All

I would be interested to know what number of IVA applications actually get a yes vote from creditors.



John

I agree that this info would be useful but IPs want IVAs to run their course successfully as it is to everyone's benefit. Most IVAs that fail do so as a result of unexpected changes in circumstances and where possible we will try and vary them or close them down with full and final settlements.

We know that Ip's want IVA's to reach completion Michael,and I agree its in no ones interest for them to fail. It would just be nice to see some sort of success score be made available to help people choose who to trust with their IVA.
Surely it wouldnt be hard for firms to work out what % of IVA's have been completed and what % have failed.

I can see what he is saying though Paul. If you are a smallish company and a lot of your IVA's fail through no fault of the firm, then their figures might not look very good.

This is why we always point people in the direction of iva.com. At least they can read reviews of companies on there and so should be confident that the one they are chosing is a good one.

Hi John. Our firm has an acceptance rate of approx 95% but this is not the figure at the first meeting. Creditors often raise objections or queries and we have 2 weeks to address these concerns. An initial rejection can be overturned and creditors are spoken to on a daily basis. Your creditors are currently reconsidering your proposal and have promised to come back this afternoon before close of business. I am keeping everything crossed for you both and hope we have good news later on.

kallis3 wrote:

I can see what he is saying though Paul. If you are a smallish company and a lot of your IVA's fail through no fault of the firm, then their figures might not look very good.

This is why we always point people in the direction of iva.com. At least they can read reviews of companies on there and so should be confident that the one they are chosing is a good one.

But surely an IP in making a proposal is saying that they believe you will be able to maintain the iva till completion.
Regardless of the size of the firm the success rate may prove to other potential customers/clients how easy the company are to work with over the 5-6 years(less if a f&f is done).

Well yes, of course they are saying that they think you will be able to maintain it, as are the creditors by agreeing to it, but the way the country is going at the moment, a lot of people who have been going along quite happily in their IVA are suddenly finding that they are out of work, or have had some other event in their life which has meant that they cannot pay anymore, and I do think we will be seeing more and more of this.

It may be a useful tool, and I'd be interested to know, but even with this statistic on a companies website, I think word of mouth (or print)recommendation is better. Just because they have a good success rate of IVA's completing doesn't necessarily make them a good firm to go with.

*The last comment is not meant in any disrespectful way at all to any of the IP's who post on here, and no offence was meant!*

I think that Plasticdaft is enquiring as to how many IVAs fail before reaching the conclusion for which they were put forward. Our professional quotes that between 30 and 40% of IVAs do not reach successful conclusion - this is much lower in some firms, but under current conditions I am even expecting my failure rate of less than 5% to increase.

The IP must believe that the IVA is viable and sustainable and reports to the court and creditors to that effect. Proposals that fail actually cost the IPs money so no reputable or sane IP would propose IVAs that they know will not go the term.

No one can legislate for marital break up, sickness and redundancy which do cause IVAs to fail. A large proportion of our clients are self employed and we did not know when we prepared their IVAs that there would be a credit crunch and global recession. When these things happen the proposal has to be varied and creditors will normally be sympathetic to changes that could not be foreseen at the outset. However, in some cases there is nothing that be done and the IVA must be failed.

I do fully agree that prospective clients should have as much access to information as possible and most IP firms will happily discuss all queries raised.