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Legal action threatened on IVA charges

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by Kay Mitchell

The Debt Resolution Forum (DRF) believes that lenders are imposing artificial barriers on those who could use Individual Voluntary Arrangements (IVAs) as a means of avoiding bankruptcy.

The forum represents advisors and companies within the debt management industry including ClearDebt and Accuma.

Consequently, the DRF is considering a legal challenge to recent changes in the fees imposed by the Insolvency Exchange, which represents lenders such as HBOS. DRF commented that this new charging structure could make many IVAs unviable and force debt advisors out of business. In the event of this happening, a significant rise of bankruptcies is expected.

The Insolvency Service is part of the Department for Business and Enterprise and has already openly declared that several creditors are snubbing IVAs – if the fee is above a certain level.

In the meantime, banks are of the opinion that IVA providers are selling IVAs as a means by which debtors can get out of their obligations.

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News posted: August 15, 2007

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