If you’re considering entering an IVA, you’ll need to find an IVA company to help. But how can you find the right one for you? Here are the IVA companies to avoid
What is an IVA?
IVA is short for Individual Voluntary Arrangement and is one of the debt management options available when you’re struggling to keep up with your debt repayments. Offered in England, Wales, and Northern Ireland, individual voluntary arrangements are legally binding agreements between you and your creditors. Depending on the terms of your IVA, you’ll make regular, affordable monthly repayments to cover all or part of your debt for five or six years. When the arrangement ends, any remaining debt will be written off.
How do IVA companies work?
IVA companies specialise in setting up and managing individual voluntary arrangements. In exchange for a fee, they’ll set up your arrangement, deal with your creditors on your behalf, and distribute your monthly payments to each of the named creditors in your agreement.
Different IVA companies work in different ways, but they should all have access to an Insolvency Practitioner, whether they employ one in-house or have a strong relationship with an independent contractor. Your Insolvency Practitioner will be the person responsible for drafting your initial repayment proposal and, if the proposal is accepted, they’ll act as the official supervisor of your IVA.
How to spot IVA companies to avoid
If you feel that an IVA could be the right solution for you, it’s time to find a company to help. Unfortunately, not all IVA companies work in the same way, and some may try to take advantage of your situation to make misleading promises or charge extortionate fees.
To help you make the right decision for you and your circumstances, here are a few warning signs to keep in mind when you’re looking for debt help:
Unrealistic claims
An IVA company that’s promising the earth might be making unrealistic claims. Firstly, be wary if you see any advertisement guaranteeing IVA acceptance. IVA proposals can be rejected for several reasons and a 0% failure rate is very unlikely. While a company should have a good track record when it comes to securing IVA acceptance, it would be unusual for them to never have a proposal rejected.
IVA companies that claim they will eliminate 90% of your debt may also be overpromising. While an IVA may help reduce your debt over time, it won’t completely write it off. As a good rule of thumb, if a claim looks too good to be true, it probably is. The % write off is dependant on each individual circumstances/case, some may write off closer to 90% but others may only write off around 50%.
High failure rate
While a 0% failure rate might be a red flag, an extremely high failure rate could mean that the IVA company is inexperienced or giving inadequate advice. It’s within your rights to ask a company to disclose their failure rate before agreeing to work with them. And while IVAs can be declined for several reasons, including those beyond the company’s control, the average failure rate is around 20%. An IVA company quoting a figure that’s substantially higher than this could be one to avoid.
Bad reviews and reputation
Take time to check reviews before committing to an IVA company. Independent review platforms like Trustpilot, Feefo, and Google My Business can help you understand other people’s experiences and whether it is a trustworthy company. Be critical though, especially if all their reviews are positive. As IVAs aren’t guaranteed, there will inevitably be some customers who have had their proposals rejected and may have left a more negative review. If every review is glowing, they may not be completely truthful. It’s also worth double-checking that the company is reputable; try to find out when they started trading and whether they have a fixed address.
Unreasonable charges
While it does cost money to set up an IVA, these fees should be reasonable. Spend some time researching average fees before contacting IVA companies so you’ll be able to tell if the figure quoted is a lot more than it should be. Consider avoiding any IVA company that charges a large fee upfront; in fact, your initial consultation should ideally be free or charged at a reduced rate. This gives you the opportunity to discuss your options and decide whether an IVA is the right debt solution for you.
Move too quickly
When looking for debt help, you may be keen to find a solution as quickly as possible. However, you should never feel pressured or rushed into deciding, especially when entering a formal legal agreement like an IVA. An IVA company that doesn’t give you the time to consider all your options, won’t explain the agreement in detail, or tries to push you into a payment plan that might not be affordable long-term is likely to be one you should avoid.
Unresponsive
Being in debt can be tough; the stress can impact your mental and physical health, the financial impact can disrupt your quality of life, and creditors chasing can bring their own challenges. It can help if you have an IVA company you can trust to be there in your times of need. If the company you’re working with is virtually impossible to contact, rarely answers the phone, and responds slowly to email, they might be an IVA company to avoid.
How can I choose the best IVA company for me?
There’s no one-size-fits-all when it comes to finding the best IVA company. Your individual circumstances can mean that a company that’s right for someone else, might not be the best option for you. Even so, it’s a good idea to seek out an IVA company that has a good reputation and is well established. Look for expert debt advisors that are friendly, put you at ease, and offer complete confidentiality. You may also want to look for a company that offers more than just IVAs; if they have access to other debt solutions, you can be reassured that you won’t be pushed into an IVA if it’s not the right debt management option for you.
If you’re looking for IVA advice, our friendly team of experts is here to help. Give us a call on 0161 8260 585 or send a message here
