IVA procedures to be offered by major debt counselling group

A leading UK debt counselling group is to start offering IVA services to its eligible clients from April 2007. The Consumer Credit Counselling Service plans to start offering this type of service to clients, and may be able to reduce the risk of consumers ending up at the door of profiteering companies that charge hefty fees for this type of service.

Compared to some companies, the Consumer Credit Counselling Service thinks it could shave two thousand pounds of the cost of going through this type of procedure for some people.

An Individual Voluntary Arrangement (IVA) is an agreement between the debtor and the creditors to pay a certain amount each month towards the debt, which is an amount that is pre-agreed by the creditor and the borrower. This agreed monthly sum is taken for a set period of time, which is usually five years in total, and once this period expired the remainder of the debt is written off leaving the borrower debt free.

However, the lenders are not obliged to accept an IVA application, and in fact more and more banks and lenders are rejecting IVAs of late, due to financial losses resulting from the increased number of people opting for IVAs and bankruptcies.

Although there is no guarantee that the IVA application will be accepted, creditors are often far happier to deal with a non-profit debt charity rather than a profiteering company to who the client is paying money, which could otherwise be going towards paying the creditors.

The Consumer Credit Counselling Service plans to offer this option to a number of clients that may be able to benefit. A number of other companies have been promoting IVAs over the last year, putting out glossy ads that make the whole process look invitingly easy and simple. However, in some cases companies are failing to warn consumers of the consequences of this type of action.

Tom Smith
9th March 2007