Wed 29th Nov, 2006
Banks Attack IVAs – Again
Ian Mullen, chief executive of The British Bankers’ Association (BBA), said: “Individual voluntary arrangements can be appropriate in some cases, but we are concerned that young, inexperienced and vulnerable people are being targeted by adverts and mail shots which lead them to believe they will be able to walk away from responsibilities. ”
He added: “The results for their long term financial position could be disastrous as they may find in years to come that they can’t get a mortgage or raise a loan to start a new business. This would not just be bad news for them but bad news for the whole of the UK economy.”
The BBA, press advertising is expect a challenge to a number of claims made by providers that they can clear 90 per cent of debt.
Market research shows that eight out of ten firms do not provide adequate information about their service, costs and the consequences of entering into different arrangements. The most damaging fact is that many consumers do not realize that the IVA will garnish 99% of the consumer’s wages for the IVA, if the consumer works overtime, the IVA receives this. However, it does not necessarily mean that the IVA will be paid off earlier, or that the consumer will see any benefit.
Nine out of ten IVA firms fail to explain alternative options and their consequences. Most firms only focused on the advantages and push the writing off of debt as a bonus. When , in fact, if a consumer can arrange their own debt consolidation program to relieve their debt within five years, they are better off in the long-run.