With the increasing popularity of IVA, Government has been dragged into an argument between creditors and IVA providers.
The IVA is a Government backed debt solution for people with serious debt problems.
The IVA was conceived in the mid 1980’s when the then Government realised that UK companies needed a mechanism to help them resolve debt problems, which could act as an alternative to bankruptcy.
As a result the IVA was formed as part of the 1986 Insolvency Act.
However, due to the unprecedented increase in unsecured borrowing in the UK over the previous 15 years, the IVA Government backed legislation, designed to help the commercial sector, has recently been adopted by the personal debt sector too.
As more and more people have been struggling with personal debts, IVAs or Individual Voluntary Arrangements, have been adapted to help individuals reach new agreements with their creditors whilst allowing them to avoid declaring themselves bankrupt.
The sudden increase in this type of IVA usage has caused some friction in the market place, with some creditors putting in place hurdle rates, which they insist must be achieved before they will accept proposed IVA’s.
Now the Government has found itself being asked to mediate in arguments between creditors and IVA providers due to the growing numbers of IVA applications.
The government, however, is reluctant to get involved and has suggested that the two sides resolve the problem themselves.
To this end there have been several open meetings aimed at drawing up a “Best Advice” model.
Even though things have been improving in recent months there’s still a long way to go before there could be said to be harmony between creditors and IVA providers.
Click here to find out more about IVAs, or call 0800 088 7503 now.
Related Articles: