# Good article on IVA vs. bankruptcy in the UK



## Brendan Burgess (14 Feb 2012)

Moneysavingexpert has an excellent article on the pros and cons of IVAs which are similar to the proposed debt settlement arrangements. 

Brendan


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## 44brendan (14 Feb 2012)

Interesting article. I note that IVA's were only availed of by 3% of those in serious debt problems. Costs quoted appear very high. This doesn't appear to be the panacea that will assist a mass number of those in severe financial difficulties! 
Unfortunately, like many of these proposed solutions "the devil is in the detail"!


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## chopps007 (23 Feb 2012)

Brendan, I am not a poster but I am a regular reader and I think you do a great job.

This article that you have linked to is not actually, in my opinion, very good at explaining IVAs. The website itself is well known for it's hatred of IVAs. I think this is down to their constant plugging of the CCCS in the UK. They are supposedly 'free' but they are actually a creditor funded operation. The fees quoted for IVAs are also not realistic as they are simply too high. I have seen some examples of this above named company putting people into solutions that are ridiculous and lasted longer for up to 20 years when an IVA would have allowed the debtor to repay debts for 5 years and write off 66% of their debts and included all fees. The IVA company would have received £7,500 which is high for an IVA but the above named company would have received over £18,000 for their solution. Free is not free. Creditors pay back a % of payments to this company. No wonder they are so for Debt Management and so against IVAs.

Anyway, IVAs are a really good solution for the right person. Yes there are fees involved but these fees come from the arrangement itself, i.e. from the creditor's share of the pot. There are also many good IVA operations who do a wonderful job in helping people to get rid of unmanageable debt.

I know a great deal about IVAs and they really can help people to make a fresh start. It remains to be seen if the new Irish solutuions will be as good as the IVA is. I cannot see the Personal Insolvency Arrangement working in its current proposed format but the Debt Settlement Arrangement is certainly an excellent proposal so far.

Regards
Chopps007


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## Brendan Burgess (24 Feb 2012)

> I think this is down to their constant plugging of the CCCS in the UK.



Hi Chops

Can you explain what CCCS stands for and how they work

Brendan


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## chopps007 (24 Feb 2012)

CCCS is Consumer Credit Counselling Service. They are classed as being free. They are funded by the banks however so impartiality has to be questioned.


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## frostie (15 Mar 2012)

You're right chopps,

IVAs are a very good way of assisting people in debt, but the startling thing about the first page of the article is that firstly, it states £6000 of debt, and secondly that the income is £40000 per year.

An IVA wouldn't even be entertained for debts of £6000 in the first place. As with the new debt settlement arrangement here, where it is for debts of €20000 and above, in the UK, it is for debts of £15000 or more.

Also, as the person has an income of £40000, the £6000 debt could probably be dealt with by a bit of belt-tightening! If it's a case where the mortgage is taking most of the income, or perhaps it is due to some other essential expenditure eg medical costs, the debt relief order would be more applicable, which is the equivalent of our debt relief certificate, for debt up to £15k/€20k.

But the relief cert would be unlikely given the level of income, as the person would probably have disposable income of more than £50 per month. In the case a debt management plan WOULD be the sensible option. It's the middle ground between the two. If the person could afford £300 per month, the £6000 would be gone in two years, paid in full, including fees which would amount to approx £1200 total, so total cost of £7200. 

To be honest, a person earning £40k with disposable income should be able to renegotiate this directly with their creditors themselves, but in some cases where creditors can be uncooperative, it may be useful to go to a debt management company.

www.frost.ie


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