January 2010

Rogue Firm Casts Doubt on Debtors’ IVA Solutions

A company called the IVA Review Board (IRB) is sending letters to debtors in individual voluntary arrangements (IVAs) suggesting they may be able to stop making payments – despite attempts by the Office of Fair Trading (OFT) to revoke its licence.

Industry experts warn that the letters could lead to debtors having their IVAs terminated. Mark Sands, head of bankruptcy at Tenon Recovery, said: "Once arrears go beyond a certain level then it’s likely the IVAs will be terminated and the debtor will have to start all over again."

Personal Debt Reaches £1.46trn

Statistics released by money advice charity Credit Action reveal that total UK personal debt increased 0.7 per cent in the 12 months up to the end of November 2009 to £1.46trn. However, bucking the long-term trend, consumer credit lending actually fell by a net £400m during the month of November as banks continued to tighten their belts.

Secured lending continued to grow, up £1.5bn and the charity estimates that the average household debt including mortgages in the UK is now £57,888.

Ministry of Justice Issues Debt Management Guidelines

MOJ have published Debt Management guidelines for UK consumers in the wake of a steep rise in the number of formal investigations in the market. Since April 2008 the OFT has undertaken 24 formal actions, including revoking licenses held by debt management businesses.

As well as highlighting the advantages of debt management plans such as lower monthly repayments, the guidelines also warn of the potential pitfalls, such as the solution not being legally binding on creditors.