Debt Matters hit by massive losses over IVA performance
In a recent report the firm Debt Matters has reported that 2007 was a very disappointing year, and that the comp0any sustained massive financial losses as a result of poor performance in the IVA sector.
For the past few years and increasing number of firms have been advertising IVAs (Individual Voluntary Arrangements) as the ideal solution for those with unsecured debts of £15,000 or more. Many consumers decided to try the IVA route in order to try and get out of debt, and at one point the IVA sector was inundated with applications.
However, according to Debt Matters the performance in the IVA sector has dropped significantly, and this has left the company facing massive losses for 2007. The level of IVA cases fell significantly, plummeting from the peak figure of around six hundred per month to under one hundred per month. This has affected profits significantly, and Pre-tax profits for the first interim to the end of September fell from £4.32m to just £346,045 compared to the previous year.
A spokesman for the firm stated: "2007 has been a disappointing year for the Group. Well-publicised difficulties in the IVA sector have resulted in a significant reduction in approved IVA case volumes. Debtmatters had built an infrastructure over the previous two years to process these case numbers but the business model relied on direct marketing."
He also said: "Since the start of 2007 our case acquisition costs trebled in a matter of months and this, combined with a reduction in nominees' fees from September 2007 of around 50%, forced the Group to undertake a strategic review of activities. This review is ongoing and a further announcement is anticipated early in the New Year."
17th January 2008