Over the last few years, IVAs have rocketed in popularity, but like any popular financial product there will always be instances where it should not have been sold to someone as they were unsuitable. The Financial Services Authority and the Insolvency Service has laid down rules that providers must abide by to prevent untrained or unscrupulous individuals from profiting by selling IVAs without due care and attention.
What should I do if I have been mis-sold an IVA?
- Complain to your Insolvency Practitioner and stop payments.
- Ask your Insolvency Practitioner to send you your IVA discharge certificate*.
- Use our free IVA calculator to find your new IVA company.
*An IVA discharge certificate is a certificate which acts as an official document to signify that your Insolvency Practitioner no longer represents you. It is issued when you exit an IVA (individual voluntary arrangement).
If you have an IVA, any of the following that occurred during the process could indicate you have been mis-sold an IVA:
Were you told you could write off all or most of your debt?
This statement is untrue. A creditor will not accept very little or nothing from an IVA agreement, in fact too little and they are likely to reject your IVA proposal and move to make your bankrupt instead. You will almost certainly have to pay at least 50p in every £1 you owe. There is no debt management solution where you don’t have to pay back any your debt apart from perhaps bankruptcy, and that’s assuming you have no assets that can be sold.
If anyone has told you that all or the large majority of your debt can be written off you have mis-sold an IVA.
Did your IP make out it was easy option out of debt?
Of all of the debt management solutions on the market an IVA is one of the most demanding. In some respects even bankruptcy is less onerous. From working out a budget to negotiating agreements with creditors and dealing with the sale of assets, there’s many things that have to happen to get an IVA off the ground and running smoothly every month. Granted most of these things your IP will do, but you also play a large part in making sure you stick to your budget and make your payment to your IP every month for 60 months.
It is by no means ‘easy’ and anyone who told you that it was has probably mis-sold you an IVA.
Were you aware that an IVA is a form of insolvency?
While many refer to IVAs as a debt management solution or a debt payment plan, actually it is a form of insolvency. Unlike other debt solutions, you are handing your finances over to a qualified third person to manage for you for 60 months. It is a serious undertaking and should be explained to you as such.
If you have an IVA and no-one has explained to you have undertaken a form of insolvency then you have been mis-sold an IVA.
Were you told it would only take a few ‘short’ months?
IVAs are not quick. The payments must be made every month for 60 months, otherwise your agreement with your creditors will fail. Most creditors will want a minimum of 50% of the money they are owed paid back, and bearing in mind there is a minimum threshold criteria of £15,000 unsecured debt to enter into an IVA it is easy to see why it takes a while to pay even part of it back. The only exception to this is if you come into a lot of money – perhaps an inheritance or lottery win – and choose to pay off the whole debt before the end of the agreement or someone steps in to pay it off for you.
If you have an IVA and were told that you could pay it off quickly in a ‘few short months’ you may have been mis-sold an IVA.
Not doing a careful financial assessment
IVAs are only suitable under certain circumstances. A quick look at your financial paperwork for a few minutes is not enough to get a good idea of your money situation. A qualified professional needs to do a financial assessment for you to see if your are suitable, and then discuss the options available to you.
Is someone gave your financials a cursory glance and pronounced you suitable, you may have been mis-sold an IVA.
I am very familiar with The Civil Enforcement Association and the High Court Enforcement Officers Association and I have written extensively on Financial Services matters.
- Hiding Money from an IVA - May 10, 2023
- How to deal with Little Loans Debt - April 27, 2021
- How to deal with debt from the DWP - April 27, 2021