Over recent years Individual Voluntary Arrangements, also known simply as IVAs, have become more widely known across the UK, with a number of firms that deal with setting up IVAs placing glossy advertisements in magazines and on television to raise awareness of this method of debt reduction. The IVA is a legally binding agreement where those eligible pay back a fixed amount each month for a set period, which is usually five years, after which any remaining balance owing to creditors is written off.
In the past companies that have advertised IVAs have in some cases been accused to misleading customers over the suitability of the IVA, and not providing enough information with regards to the downside of the IVA, which is known as a softer alternative to bankruptcy. However, new codes set out by the government should help to make the whole IVA process more transparent and easier to understand.
The new IVA protocol has been put together with a working group that includes creditors, IVA firms, and the Insolvency Service, and has been welcomed by the whole industry.
An official from the Insolvency Service stated: “The Insolvency Service has facilitated a process which has successfully produced a voluntary code for IVAs to reflect the changing needs of the market. It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format. Today’s protocol is a significant achievement for everyone involved.”
An official from the British Banker’s Association stated: “The BBA, the Insolvency Service and the participating IVA providers are united in support for this agreement, which should provide customers with the reassurances they need in order to make the right choice for their financial futures.”
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