Will New IVA and Debt Standards Work?

At last, IVA (Individual Voluntary Arrangements) and Debt companies have agreed new industry standards to help people resolve their debt problems. IVA companies and the British Bankers' Association have finally agreed a set of industry standards which cover debt information, debt documentation, advertising and IVA advice. I think it's been far too long coming especially as these companies have been left to advertise and obtain customers in practically any way they see fit.

During an IVA lenders are contractually bound to stop charging interest on debts so that the customer can actually afford to repay a specific amount every month. An IVA usually lasts for 5 years, after which, the debts are written off. This move has resolved the arguing between lenders and IVA companies which originally started earlier this year.

Lenders felt that IVA fees weren't fair because the fees are paid up front. This meant that the IVA company had very little incentive to keep up to speed with the customer service side of the business or even see the IVA process through to the end of it's 5 year cycle.

Also some IVA companies advertise promises of 'writing off 90 per cent of your debt' and other unsustainable marketing messages to potential customers. This is an unrealistic and is how many IVA companies attract desperate people who are struggling to repay their debts and living in fear of going bankrupt.

It is concerning that customers may have been forced in IVA product rather than a simple debt management plan or another more suitable product for their needs. This can only mean good news for people who are struggling to repay debts, they can start using the services this industry can provide safe in the knowledge that the company they choose must treat them fairly and honestly.

Simon Duffy writes for the Financial Blog, a UK Finance Blog talking about all aspects of personal finance.

Source: www.articlealley.com