Representatives of banks and IVA brokers met yesterday to discuss issues relating to individual voluntary arrangements (IVAs).
IVAs allow a debtor to come to an agreement with their creditors, often arranging to pay back a reduced amount over a fixed period of time, with a proportion of the debt being written off.
However, the growing popularity of IVAs has led to some problems.
Some analysts have suggested that consumers are using them as an easy way out of debt and a softer alternative to bankruptcy.
The huge leap in the number of people applying for IVAs last year caused some banks to begin rejecting arrangements.
In addition, concerns were voiced within the banking industry about the fees some IVA brokers were charging clients.
Nick O’Reilly, vice president of the Association of Business Recovery Professionals, said his organisation was hoping to build consensus with the banks, by explaining what it is that IVA brokers actually do to earn their fees.
“I think it’s probably a question that banks don’t necessarily understand the work that insolvency practitioners have to do to put a voluntary arrangement in place,” he said.
Recently, several IVA firms were admonished for making unrealistic claims in their advertising regarding the amount of debt that applicants could hope to have written off.
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