If you are thinking about getting an individual voluntarily 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.
How can you learn to recognise less ethical firms?
Here are a few red flags:
- An IVA company that does not charge a fee at all for its services. Free consultations are fine, but an IVA should carry a cost. It costs money for an IP to set up and maintain an IVA, so you should expect the company to collect it from you.
- An IP that tries to charge you a big fee upfront. While you should expect to pay a fee for your IVA, legitimate companies will allow you to pay in monthly instalments as part of your debt repayment plan.
- Unrealistic claims. Watch out for companies that “guarantee” IVA acceptance by your creditors, or which promise a massive payment reduction. Whilst IVAs can often drastically reduce your monthly payments (where they are unaffordable) companies outselling each other 80% written off vs 90% written off appear to set the percentage written off as the end-goal, rather than an affordable payment plan which serves both creditor and debtor interests. Also note that an IVA will generally help you reduce and expunge your unsecured debt, but getting secured debt (such as a mortgage) included is more or a challenge. There are also certain types of debt you cannot include at all, like child support arrears and student loans. If a company promises it can include these debts, go somewhere else.
- Companies that operate from a PO box with no street address.
- Companies that operate without transparency. You should be able to get detailed information about the company, the background of the IP, and the IVA process itself.
- Watch out for companies that aggressively try to sell you an IVA as the only possible solution when another solution may actually be more suitable for your situation. You should only use an IVA if you have the ability to make a large lump sum payment toward your debts or you have enough income that you can make reliable monthly payments. If your income fluctuates unpredictably and you do not have enough to make a sizeable lump sum contribution at the start of the plan, you should be looking into alternatives.
Picking the Right IVA Company
A legitimate IVA company will always:
- Tell you up-front about the risks of an IVA. This includes the possibility that your creditors will not accept the plan, as well as other potential drawbacks like the need to remortgage your home (if you have significant equity in it).
- Give your situation personal consideration. A legitimate IP will never rush you through the process of getting an IVA or present it as a one-size-fits-all solution. The first step is always to figure out whether an IVA is right for you.
- Treat you with respect. If you have any questions or concerns, a good IP will take the time to address each of them thoroughly with full transparency.
- Charge you a fair fee and not demand the entire sum upfront.
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. When you meet with one of our licensed and authorised Insolvency Practitioners, we will be glad to take the time to thoroughly answer any questions you may have. We will help you figure out if an IVA is the best choice for you based on your financial situation and what you are comfortable with. If it isn’t, we will help you find an alternative plan which is a better fit.