www.iva.co.uk

I recently received my latest letter from Eversheds stating that Max Recovery have acquired another of my debts (this is the 8th or 9th one I think).

I was just wondering if anyone knows anything about Max Recovery and - in particular - why Eversheds always act on their behalf? Would it not be cheaper for Max to administer the debts themselves?

I dont really understand the Debt Purchasing business at all - but would like to say that Eversheds' letters are always brief, polite, and to the point - so if Messrs. Max Recovery and Eversheds are able to profit from taking a chance on acquiring my (and presumably many other debts) - then good luck to them.

Two of my orginal debts have gone to Max Recovery as well.Also the letters to us are brief and polite. I dont understand why they do this either .Seems pointless to me .

Basically it's some of your creditors selling debt at a discount and getting paid now, rather than waiting for dividends- the debt costs them money to administer.

Max Recovery are American and I don't think are geared up to handle the admin of the debts so they have subcontracted this to Eversheds. It's actually good news as the creditors are less fragmented and also Eversheds are pretty decent people for IPs to work with into the bargain. This can help if ever a variation is needed.

Ian

Hi Rachel -

I think the reason behind all this is that the original Creditor sells the debt on very cheaply to a debt purchaser - and that purchaser takes a chance that the debtors IVA will successfully complete and that they will therefore make a tidy profit from their purchase.

What I DONT understand is when Creditors who voted "Yes" sell the debt on. If they had enough faith to vote yes - on the assumption that the IVA was bona fide and would complete successfully with a reasonable dividend - why then sell it on for a fraction of this potential return?

Its a mystery to me.

Ian -

Thank you for that - I was busy typing away before I saw your reply!!!

Certainly my "pool" of Creditors will now be much smaller if ever I have to seek a variation and - like you say - that should be a good thing.

Am a bit curious as to what attracts a USA company to the small beer of UK debt - presumably it must be pretty profitable?

Two of our creditors who voted yes to our proposals also sold the debts on.I cant understand it ,seems daft to me.

The debt purchase industry is very profitable, and I find it odd that banks who give us such a hard time about dividends and hurdle rates will sell on their debts often for less than 10p in the £. It's all about turning dead money into reinvestable money - but one wonders in today's climate whether this will become less attractive for lenders?

Hi Optimist, I had 4 of those letters from Evershed's yesterday saying that Max Recovery had bought the debt, they seem to relate to my GE Capital Bank (store card) accounts.

It's generally quite good business for them. It's also important to realise that in accounting terms there is no difference to a bank between bankruptcy and an IVA. The Banks have to write the debt off so it immediately comes off the bottom line. Given the risk that a debt in an IVA won't get paid at all, often the bank will then want to get some cash in quickly. This also applies to non-performing debt, not just folks in an Insolvency.

Others in the arena are Link Financial, Aktiv Kapital, Cabot to name just 3.

As the banks don't have to write the debt off in a DMP you can then see how it might be attractive to go down that path instead, where there won't be a write off, in which case assignments are less common.

Ian

Hello janey -

In my case,if things go on at their current transfer rate then Max Recovery will have bought more or less all my debts by the end of my IVA!!!

Given that debt purchasing is semingly so profitable - I wonder how it is that a US company (Max) seems to have more or less cornered the UK market in terms of buying consumer debt? Were their UK competitors slow off the mark in getting established?

Still dont understand what criteria companies use to sell off debt - is it just random "blocks"? - but I suppose it must make sound business sense or they just would not do it. If I was solvent I think I would be looking to buy some shares in Debt Purchasing companies!!!

I have lots of IVA cases, where paying dividends is easy - one cheque to Max Recovery as they have bought all the debts! I jest not!

And in terms of criteria - I think that Ian explained it all rather well in his earlier post.

All this suggests that there must be good profits to be made - I just wonder why other entrepreneurs have not / are not seeking to follow in the footsteps of Max Recovery.

Perhaps the companies that Ian mentions are the new players on the block?

Thats an interesting point from Melanie - I had more than 20 creditors at the start of my IVA and I think Max Recovery have already purchased 9 (I am just one year into my IVA).

On re-calculation I think it is only 7 so far!!!

I have had a look at iva.com and note that Eversheds are listed on their register of IVA Companies. Does anyone have their IVA with Eversheds? If their letters to debtors regarding debt purchases are anything to go by they must be a great company to be with - their letters are brief, to the point, and polite.

Having said that I dont know if all the companies listed on iva.com actually offer IVA preparation to individual debtors - so I may be on the wrong track.

Eversheds do not have insolvency practitioners who take appointments - at least not in the personal insolvency field. They are a law firm, and sometimes lawyers who specialise in insolvency law take the JIEB examinations just to give them credibility amongst their clients and additional knowledge.

I think that they should be removed from iva.com to be frank.

Hi,

I have just been reading about the Evershed topic and wondered if it is more favourable for them to accept a full and final settlement.

I'm just getting a little nervous near the time of my variations meeting and looked at the debt I have, that was bought by Evershed.

Hoping for a miracle!