Clear Start are another
debt solution company who claim to have a high volume insolvency department that processes hundreds of IVA applications every month - although it might be worth noting that, according to
IVA.com, they only employ one IP to supervise this heavy workload.
Clear Start nonetheless claim to be a big player with considerable expertise in the consumer debt market and it therefore seems reasonable to ask why, if they have so much expertise, do they leave basic errors on their web site.
In their introduction to IVAs they claim for example that:
".... under either bankruptcy or IVA they are the same assets and income that are up for distribution to the creditors; it is just that it is the individual who proposes what will be paid into an IVA, whereas under bankruptcy the magistrate at the hearing decides what the outcome will be."This is nonsense. Bankruptcy hearings are held in County Courts not Magistrate's Courts - an important legal distinction - and a District Judge (not a magistrate) decides whether the debtor should be declared bankrupt or not.
The district judge does not make any decisions about the debtor's assets at all. That is dealt with, in the first instance, by the Official Receiver and - if there are sufficient assets - the case may be handed over to an IP who will act as a 'trustee in bankruptcy' to arrange the distribution of assets to creditors.
Having failed to understand which court deals with bankruptcy petitions,
Clear Start also lead into this display of their own lack of basic knowledge with the remarkable comment that:
"The IVA was designed initially to be a more convenient means for processing individual insolvency cases without incurring the excessive costs and court time involved in bankruptcy."
This is simply misleading. IVAs were not designed for 'convenience'. They were originally introduced as an alternative to bankruptcy that would provide a greater return for creditors.
Indeed, when an insolvency practitioner acts as Nominee for an IVA they are required to produce a report on the IVA proposal which includes a comparison of the costs and the returns to creditors that would be achieved through bankruptcy or through the IVA.
IVAs were also originally designed for small business owners to enable them to continue trading their way out of insolvency. They were not originally intended to provide for personal insolvencies on the current scale.
To imply that IVAs are a less expensive solution is also wrong. The likelihood of the costs of 'processing' a bankruptcy being greater than the costs of a setting up and supervising an IVA are close to zero.
That's why so many
debt providers are scrabbling to increase their share of the 'IVA market' - it's more profitable and, despite claims to the contrary, IVAs are also under-regulated and they have also been subject to less scrutiny by the courts than bankruptcies.
If excessive costs are being incurred, they are now very obviously being incurred - whatever the original intentions when they were introduced - in IVAs.
The suggestion that bankruptcies also took up excessive court time is also nonsense. Most uncontested personal bankruptcies are held in the judge's office (chambers) and they are over in a matter of minutes. An uncontested bankruptcy hearing probably takes up no more court time than an application for an interim order in an IVA.
So what ? Nit picking ?
Not really. When companies set themselves up to offer advice to often desperate debtors it is important that they get the detail right. IVAs stand or fall on points of detail in both the proposal itself and in sticking to the very precise requirements of the
Insolvency Act.When
Clear Start lead their introduction to IVAs with references to bankruptcy that are either wrong, misleading or designed to scare - by references to magistrates courts and excessive costs - they are simply reinforcing negative images of a bankruptcy process that may actually be the best and most cost effective solution for the debtor.
If this is unintended. If there is no deliberate, cynical intent in their sales pitch then surely
Clear Start should at least be able to get even the basic facts right about the 'product' they are selling ?
Displays of incompetence can sometimes be excused as endearing displays of human frailty but they might also prove very expensive for debtors.
Caveat emptor.