The Truth Behind Debt Advice and IVAs

Jul 3, 2012   //   by Daniel Morris   //   Guest Post, Personal Debt  //  1 Comment

Financial comparison websites are there for consumers to purchase financial services products such as general insurance, credit cards, loans and savings accounts. One purpose of price comparison websites is to see everyone have access to appropriate financial products, and the confidence and capability to use them to make a positive difference to their lives.

Many people, particularly those living on low incomes, cannot access mainstream financial products such as bank accounts and low cost loans. This financial exclusion imposes real costs on individuals and their families, often the most vulnerable people in our society. It also has costs for the communities in which they live.

For many families, debt means that substantial parts of their weekly income are spent on servicing loans, and usually for goods already consumed, such as food, petrol or clothing. The consequences of servicing high levels of debt are financially crippling, and have disastrous effects on these families’ health and wellbeing. Access to affordable and available credit would go some way to ameliorating this situation.

Financial comparison websites can also be helpful when seeking debt advice. Don’t be misled by clever advertising or sales techniques when looking for debt solutions as it is unlikely that you will get a lower monthly payment whichever debt solutions company you choose. This is because debt solutions are based on affordability.

Please note that applying for an IVA is not the same as applying for car finance or a mortgage because its up to the people you owe money to decide how much you pay each month… NOT the IVA provider!!!

If you shop around for an IVA you will see two types of advisors, firstly the sales based companies who advertise on TV, radio, tabloids or online on the pay per click sponsored listing in the search engines and Secondly the free services such as the citizens advice bureau. You see taking out an IVA is not the same as taking out a loan or a credit card, because its the creditors who decide the IVA monthly payment not the IVA firm providing the IVA.

Many IVA firms will tell you that their close personal relationship with the banks means that they know what the creditors will accept. This may just be sales talk, the truth is that its the creditors who decide what monthly payment is agreed.

If you speak to one IVA firm and they say your IVA payment will be £500, but then another firm says it will be £400, be very wary! IVA payments are based on affordability, so if you fall for the “cheaper deal” line, then it is most likely that you will be disappointed at your IVA creditors meeting when your IVA proposal will be modified before it is accepted. Please note that you will not know this until your IVA is submitted.

Please note that an IVA is supposed to be based on an affordable monthly payment, so a decent IVA provider will never force you to pay more than you can realistically afford.

This article was submitted by Richard Sorsky, Director of Bankruptcy-Insolvency, a consumer debt advice agency.

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  • Bankruptcy Clinic

    You make some great points about an IVA though there is no such thing as a free IVA. Yes government back debt companies can help you setup an IVA but there are still fees to pay which should be fully disclosed before you enter an IVA