IVA governing body thinking of suing banks
August 27, 2007
A governing body for a number of IVA companies is thinking of suing banks in the UK for hindering IVA cases and forcing an increase in bankruptcies as a result of this.
The Debt Resolution Forum represents a number of firms that deal with Individual Voluntary Arrangements, and officials from the body state that the action being taken by bank representatives is leading to an increase in bankruptcies, hindering the chances of those in debt to benefit from IVAs, and could even result in driving some advisers out of business altogether.
IVAs are designed to help those with severe debt problems as an alternative to bankruptcy, the effects of which can be long lasting and severe. However, banks are making it increasingly difficult for consumers to take the IVA route, and many have had to resort to bankruptcy as a result of this. The DRF now plans to challenge fees applied on IVAs by a body that represents a number of banks, the Insolvency Exchange, stating that the level of the fees is making IVAs unviable as an option for consumers.
One spokesperson from the Debt Resolution Forum stated: ‘Unless an effective new deal is reached, an explosion in bankruptcies is likely.’ Another official stated: ‘The longer-term effect could be to push more people into bankruptcy, where creditors would get an even lower return.’
According to representatives from the Insolvency Service ‘effectively refusing to vote in favour of IVAs where the fee is above a certain level’.
An increasing number of consumers in the UK are finding themselves buried in debt to the point where they cannot keep up repayments, and therefore many have made enquiries about debt management options and IVAs.
Alan Wright
27th August 2007
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