Simple IVA Is On Its Way
The Government is set to unveil plans that will make it easier for consumers to take out Individual Voluntary Arrangements - the debt-laden's alternative to bankruptcy.
Under plans currently being rubber stamped, a 'Simple IVA' will be introduced later this year that will help speed up the application process and allow more people to apply for the debt repayment programme.
Currently, for an IVA to be approved, creditors responsible for 75% of the value of the debt have to give the green light. It is expected that this will be reduced to 51% for people with debts below £75,000.
A standard application process and contract will also be introduced to speed up the time it takes to complete an IVA. However, it is believed plans to introduce another tier of IVA, which would have allowed anyone with debts below £25,000 to be automatically approved, have been rejected.
It is thought the Government will unveil its plans later this month, with a change to the law implemented before the end of the year.
An IVA is a legal contract between an individual and creditors that is less restrictive than choosing bankruptcy. Lenders agree to wipe out a proportion of the balance, usually up to 65p in the pound, if the creditor agrees to make a regular monthly repayment.
Existing IVA laws were introduced by the 1986 Insolvency Act and were designed for more complex business-generated debts incurred by entrepreneurs. However, in recent years they have increasingly become a tool for ordinary over-indebted consumers.
Charles Howson, chief executive of Accuma, a personal insolvency specialist, said: 'The existing laws are outdated and don't apply to the vast majority of people applying for an IVA today. These rule changes would simplify the process and make taking out an IVA more viable for people in debt.'
The Government wants to make it easier to take out IVAs in a bid to stem the number of consumers choosing bankruptcy. More than 47,000 declared themselves bankrupt last year, up from 35,000 in 2004, and the International Monetary Fund has warned that the UK economy could be damaged if the rate of growth continues.
Ironically, insolvency experts blame the rising bankruptcy rate on the 'quickie' bankruptcy law of 2002. It cut the discharge period - when a bankrupt cannot lead a normal financial life - from three years to one, making bankruptcy less damaging and embarrassing.
Michael Clarke, This is Money
2 March 2006
Under plans currently being rubber stamped, a 'Simple IVA' will be introduced later this year that will help speed up the application process and allow more people to apply for the debt repayment programme.
Currently, for an IVA to be approved, creditors responsible for 75% of the value of the debt have to give the green light. It is expected that this will be reduced to 51% for people with debts below £75,000.
A standard application process and contract will also be introduced to speed up the time it takes to complete an IVA. However, it is believed plans to introduce another tier of IVA, which would have allowed anyone with debts below £25,000 to be automatically approved, have been rejected.
It is thought the Government will unveil its plans later this month, with a change to the law implemented before the end of the year.
An IVA is a legal contract between an individual and creditors that is less restrictive than choosing bankruptcy. Lenders agree to wipe out a proportion of the balance, usually up to 65p in the pound, if the creditor agrees to make a regular monthly repayment.
Existing IVA laws were introduced by the 1986 Insolvency Act and were designed for more complex business-generated debts incurred by entrepreneurs. However, in recent years they have increasingly become a tool for ordinary over-indebted consumers.
Charles Howson, chief executive of Accuma, a personal insolvency specialist, said: 'The existing laws are outdated and don't apply to the vast majority of people applying for an IVA today. These rule changes would simplify the process and make taking out an IVA more viable for people in debt.'
The Government wants to make it easier to take out IVAs in a bid to stem the number of consumers choosing bankruptcy. More than 47,000 declared themselves bankrupt last year, up from 35,000 in 2004, and the International Monetary Fund has warned that the UK economy could be damaged if the rate of growth continues.
Ironically, insolvency experts blame the rising bankruptcy rate on the 'quickie' bankruptcy law of 2002. It cut the discharge period - when a bankrupt cannot lead a normal financial life - from three years to one, making bankruptcy less damaging and embarrassing.
Michael Clarke, This is Money
2 March 2006
posted by Your Friends @ Myvesta.org.uk at
3/04/2006 05:59:00 pm
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