There are some sweeping claims being made for IVAs out there in the debtorsphere.
They're not alone, but Debt Help Direct are claiming that "the interest on your accounts is frozen immediately" which gives the impression that you only need apply for an IVA and the interest on your debts is frozen.
Not true ! All of the lenders who can charge interest will continue to do so until the voluntary arrangement is approved by a creditors meeting and they have every right to do so.
If it takes a year to set up your IVA - it took eleven months to set up my moderately complicated arrangement - the lenders will keep charging interest even if they have stopped demanding repayments.
Example: If your debts include a bank overdraft then charges will continue at the current overdraft rate and if you are over the arranged overdraft limit you will also be hit for excess charges on a daily basis until the date when the IVA is approved by a creditors meeting.
The blunt truth here is quite simple. You may not even know what the total claims are against your IVA until all of your creditors have submitted their final proof of debt after the creditors meeting. That's the crunch time !
It is more than misleading for Debt Help Direct to post bullet points which suggest that interest charges are somehow magically frozen by some quick fix. It takes time to set up an IVA and the longer it takes the more interest you pay.
Showing posts with label Voluntary Arrangement. Show all posts
Showing posts with label Voluntary Arrangement. Show all posts
Saturday, 3 February 2007
The Numbers Game.
The 2006 insolvency figures have just been released and we now know that the number of individuals declared bankrupt in the last quarter of 2006 increased by 24.8 per cent on the corresponding quarter of 2005. That's a cool 17,063 people made bankrupt.
The real growth however was in the number of people in the UK taking out individual voluntary arrangements (IVA) and the numbers - compared with the last quarter of 2005 - were up by an incredible 81.9 per cent to 12,741.
These are very big numbers so it's salutory to bear in mind that these figures refer to activity that is controlled by a closed shop of self-regulating professionals. Let's not forget that, by law, only licensed IPs can set up and supervise voluntary arrangements.
But, let's also be charitable and assume that the IP nominee/supervisors fees on each new IVA was only £5,000, That would still give the IPs guaranteed additional fee income over the next five years of £63,705,000 - and that's just from crop of new volunteers in the last three months of 2006.
Did anyone else wonder how the bigger players managed to fund all of those TV ads telling folks how government legislation now enabled them to pay off only a fraction of their debts ?
The real growth however was in the number of people in the UK taking out individual voluntary arrangements (IVA) and the numbers - compared with the last quarter of 2005 - were up by an incredible 81.9 per cent to 12,741.
These are very big numbers so it's salutory to bear in mind that these figures refer to activity that is controlled by a closed shop of self-regulating professionals. Let's not forget that, by law, only licensed IPs can set up and supervise voluntary arrangements.
But, let's also be charitable and assume that the IP nominee/supervisors fees on each new IVA was only £5,000, That would still give the IPs guaranteed additional fee income over the next five years of £63,705,000 - and that's just from crop of new volunteers in the last three months of 2006.
Did anyone else wonder how the bigger players managed to fund all of those TV ads telling folks how government legislation now enabled them to pay off only a fraction of their debts ?
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