If you are thinking about getting an individual voluntary arrangement (IVA) or other plan to consolidate, reduce, and expunge your debt, you will need to find a company to set it up. Because an IVA is a formal arrangement, you need to work with a qualified Insolvency Practitioner (IP).
While there are trustworthy, reliable companies out there that will help you, there are predatory companies as well. While you are in debt, you need to be careful who you contact about your situation. When you reveal that you are in desperate straits, you put yourself in a vulnerable situation, one that less ethical firms will readily take advantage of.
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What is an IVA company?
An IVA company is a service provider that can help you set up an Individual Voluntary Arrangement (IVA) to repay your debts, and help you manage that arrangement, in exchange for set fees.
The best IVA companies will make sure you understand what debt management options are available to you, will assign an Insolvency Practitioner (IP) to handle your case, and will take care of monthly payments to your creditors once your debt solution is in place.
There are debt charities, like the Money Advice Service, that offer debt advice and an IVA set up as a free service. Unlike debt management companies, however, debt charities can’t always offer a one-stop-shop that provides you with an IP, debt advice, and other IVA services.
Is there a way to distinguish between good and bad IVA companies?
Whether IVA firms are good or bad ultimately comes down to the experience of the people using them. If someone has used an IVA company to set up a legally binding debt solution, and has successfully paid off their creditors, they’re likely to think they used the best IVA company available to them.
But just because it’s hard to single out the ‘best’ IVA company, doesn’t mean there aren’t IVA companies to avoid, and warning signs to keep an eye out for when you’re looking for an IVA company to help you with your money issues.
Signs of a responsible IVA company
Believe it or not, a fee is a good thing. You should be wary of any IVA firm that does not charge a fee for its services. Free consultations are great, but an Individual Voluntary Arrangement should carry a cost. It costs money to set up an IVA, to assign an Insolvency Practitioner, and to maintain payments throughout the arrangement, so you should expect IVA companies to collect a fee from you.
Offers multiple debt solutions
IVAs are extremely popular debt solutions, because they transform unaffordable debts into one affordable monthly payment. That said, IVAs are not the only debts solutions available. A responsible IVA company will explain to you, in plain English, why an IVA is right for you – or take you through the alternatives if you don’t have the money to make regular IVA payments.
Has a fixed address
Office visits can be a useful barometer of whether an IVA company is legitimate. While it’s not necessary for you to conduct an on-site visit before choosing a provider, there are IVA companies out there who operate from a PO box with no street address. This is a red flag – the best IVA companies will provide detailed information about the company, the background of the IP, and the IVA process itself.
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Signs of less ethical IVA companies
Big upfront fees
IVA companies that try to charge you a big fee upfront are IVA companies to avoid. While you should expect to pay a fee for your IVA, as well as your Insolvency Practitioner, a legitimate IVA company will allow you to pay in monthly instalments as part of your debt repayment plan.
Watch out for companies that ‘guarantee’ IVA acceptance. All IVAs start as a proposal. That proposal is then presented to creditors by your Insolvency Practitioner, and creditors have the right to reject it. Any company that guarantees acceptance, or advertises 0% failure rates, is worth avoiding. Unfortunately, there are no guarantees with IVAs, and IVA companies should be honest about this.
An IVA will generally help you reduce, or eventually write off, your unsecured debt, but getting including secured debt (like a mortgage) included in an IVA is a real challenge. That doesn’t stop certain IVA companies from claiming they can secured debts as part of your monthly payments. You should always be wary of unrealistic claims.
How to pick the right IVA company
Good IVA companies will be upfront about the fees involved in an IVA, from the level of your monthly payments, to the costs involved with retaining your Insolvency Practitioner. An IVA should never feel like it is stretching you too thin financially – the best Insolvency Practitioners will work with you to make sure you don’t pay more per month than you can comfortably afford.
Lifestyle and circumstances
The best IVA companies will consider your personal situation, and will make sure their Insolvency Practitioners do too. A legitimate IP will never present an IVA as a one-size-fits-all solution. The first step in the process is to figure out whether an IVA is right for you. The next is figure out how much you can afford to pay creditors per month while making sure you remain comfortable.
These days, every company comes with a website, and most company websites display reviews. Reviews are a great way for people to gauge whether a business is legitimate or not. You should avoid companies who don’t display reviews. Similarly, you should read reviews for the IVA companies who do, to make sure other people have had a positive experience.
So which IVA company is best?
As mentioned previously, it’s hard to pick a definitive ‘best’ IVA company. The best IVA company is the IVA company that works best for you – a company that has a good track record, a low IVA failure rate, meets your needs, and ultimately helps you improve your financial situation.
At IVA Plan, we have helped a lot of customers who had the misfortune of dealing with predatory IVA companies in the past. Many of these customers only found themselves deeper in debt. Our number one goal is to provide you with the knowledge you need to make informed choices.
We will help you figure out if an IVA is the best choice for you. If it isn’t, we will help you find an alternative plan which is a better fit. But if you do choose an IVA, we will work with you, and your Insolvency Practitioners, for as long as it takes for you to get a completion certificate.
Where can I find out more about IVAs?
Deciding on a debt solution or an IVA company to help improve your financial situation is a big decision. Before you dive in, you should consider all your options, and make sure you take debt advice.
IVA Plan can help. All of our advisers can offer you specialist debt advice, and can give you all the information you need to make an informed decision on an IVA- including details on fees, Insolvency Practitioners, and answering any questions you may have about the process.
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