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What is a Mis-sold IVA

04/11/2021

Creditfix > Knowledge Hub > IVA > What is a Mis-sold IVA

For anybody struggling to deal with severe debt, debt solutions like IVAs that allow you to pay off the debt you can afford, while writing off what you can’t, can feel like a Godsend. Unfortunately, there are some companies who force people into IVAs when they’re not necessarily suitable candidates. This practice is known as mis-selling.

In this guide we’ll explore the concept of mis-sold IVAs, including what mis-selling is, some of the signs you may have been mis-sold an IVA, and who is liable if you find yourself in that position. First, though, let’s remind ourselves what an IVA is.

You could write off up to 81% of your unsecured debt today

What is an Individual Voluntary Arrangement (IVA)?

An Individual Voluntary Arrangement, better known as an IVA, is a legally binding debt solution that an individual reaches with their creditors, allowing them to repay their debts through a series of monthly payments.

An IVA allows you to consolidate all of your unsecured debts – including credit cards, store cards, and payday loans – into a single monthly payment which is based on your affordability. These payments are then distributed among your creditors as partial repayment of your debts.

You will make your monthly payments for a fixed period, usually five or six years, after which any remaining debts will be written off by your creditors, leaving you free to rebuild your financial life.

What does it mean to be mis-sold an IVA?

While most IVA providers do their best to help match clients with the best solution for their individual circumstances, unfortunately there are certain bad actors out there who take advantage of customers through mis-selling.

Being mis-sold an IVA is what happens when people deal with a suspect IVA company, are given poor quality advice, and are then forced into an IVA when it’s not necessarily the most suitable solution for them.

IVA mis-selling often involves people signing up to the arrangement when they don’t fully understand what it involves. The IVA provider may rush through the process in order to claim a fee, and the result is often that the individual can’t afford their monthly IVA payments and therefore defaults on the agreement.

Who is responsible for overseeing my IVA?

Even if you’re in debt and have been in direct contact with your creditors about a repayment plan, you won’t be able to set up an Individual Voluntary agreement on your own. An IVA can only be set up by an Insolvency Practitioner.

An Insolvency Practitioner (or IP) is a licensed debt professional empowered by the Insolvency Practitioners Association (IPA) to set up and manage debt solutions like IVAs and bankruptcy.

It’s your IP who will help you draft an IVA proposal that allows you make an affordable monthly payment to your debts and avoid bankruptcy. Once your IVA agreement kicks in, your IP will handle your payments and ensure they’re shared among your creditors.

Essentially, it’s your Insolvency Practitioner’s job to oversee the creation and successful completion of your IVA, and they have a responsibility to step forward if they feel you’ve been badly advised.

Write off up to 81% of unaffordable debt.

Creditfix have helped over 182,000 people in the UK with their debts.

We can help you avoid bankruptcy

Stop nasty phone calls from creditors

Make one affordable monthly payment

What are the signs that I may have been mis-sold an IVA?

Even for people who have done their research on IVA providers and have entered into a legally-binding arrangement, they may later realise that something isn’t quite right. Below are some warning signs that you may have been mis-sold an IVA.

You’re asked to pay IVA fees upfront

There are various costs associated with setting up and managing an IVA, so you should expect to pay your IVA provider some sort of fee that allows them to cover their costs.

That said, legitimate companies will allow you to pay in monthly instalments as part of your debt repayment plan so you shouldn’t have to pay any money over and above your monthly contribution. If a provider asks you to make a big payment upfront, you should be wary.

You’re asked to make extra payments

Under the terms of your IVA, you should only make one payment per month towards the arrangement. That payment will cover the full amount you’re paying towards your debts, as well as any fees charged by your IVA provider.

You therefore shouldn’t be making any ‘extra’ payments on top of your monthly contribution. If your IVA company or Insolvency Practitioner asks for payment that isn’t part of your IVA proposal, it could be an indication you’ve been mis-sold.

You’re struggling to meet your monthly contribution

One of the most obvious signs you’ve been mis-sold an IVA is if you’re struggling to make your monthly payment.

When an IP draws up your IVA proposal, the level of your monthly payment is based on your finances. You should only be paying an amount you can afford towards your debts.

If you’re struggling to meet your monthly contribution each month, especially if it’s from the start of the arrangement, it could be a sign that a bad-faith adviser has forced you into an IVA when you weren’t suitable for one.

Who is liable if I feel my IVA was mis-sold?

While IVA firms and debt management companies offer IVAs, they’re not actually liable if you feel your IVA was mis-sold. That responsibility lies with your Insolvency Practitioner.

As the arbitrator and administrator of a legally-binding agreement, your IP is personally liable for your IVA. If you feel you have a strong case for being mis-sold an IVA and want to take legal action, then you would sue your IP rather than the company.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

What can I do if I feel I’ve been mis-sold an IVA?

It’s a horrible feeling to have entered into an agreement to deal with your debts, only to realise an IVA isn’t the right solution for you. If you feel you have been mis-sold an IVA, or that your Insolvency Practitioner has acted improperly, here are some steps for you to take.

Get in touch with your Insolvency Practitioner

Even if you’re worried you’ve been mis-sold an IVA, you shouldn’t jump straight to discussing legal action. Instead, you should get in touch with your Insolvency Practitioner to discuss the issues you are having.

Approaching your IP and having an honest conversation about the issue first may allow you to resolve the situation or clear up any crossed wires. And even if it doesn’t, discussing the problem with your IP allows you to get a better understanding of your case if you then decide to take things further.

Lodge a complaint with your Insolvency Practitioner

If you’ve taken the issue to your Insolvency Practitioner and you weren’t satisfied with their response, the next step is to lodge a formal complaint with your IP.

The complaint process should be laid out somewhere on the website of your IVA provider. Make sure you read the process carefully and follow each of the steps. If you’re concerned about making a mistake, sites like debt camel, or debt charities like the Money Advice Service or your local Citizens Advice Bureau, should be able to offer their support.

Lodge a complaint with the Insolvency Service

If the complaint lodged with your Insolvency Practitioner remains unresolved, it’s time to go external. This means complaining to one of the regulatory bodies that either oversee the IVA process, or are responsible for regulating the activity of Insolvency Practitioners.

Which regulatory body you lodge a complaint with depends on your individual circumstances, but some possible options include:

Insolvency Service: The Government department responsible for regulating the insolvency profession.

Insolvency Practitioners Association: The professional body that empowers Insolvency Practitioners to oversee legally-binding debt solutions.

Financial Ombudsman: An organisation that settles complaints between consumers and businesses that provide financial services.

 

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04/11/2021

What is a Mis-sold IVA

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What is a Mis-sold IVA

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For anybody struggling to deal with severe debt, debt solutions like IVAs that allow you to pay off the debt you can afford, while writing off what you can’t, can feel like a Godsend. Unfortunately, there are some companies who force people into IVAs when they’re not necessarily suitable candidates. This practice is known as mis-selling.

In this guide we’ll explore the concept of mis-sold IVAs, including what mis-selling is, some of the signs you may have been mis-sold an IVA, and who is liable if you find yourself in that position. First, though, let’s remind ourselves what an IVA is.

You could write off up to 81% of your unsecured debt today

What is an Individual Voluntary Arrangement (IVA)?

An Individual Voluntary Arrangement, better known as an IVA, is a legally binding debt solution that an individual reaches with their creditors, allowing them to repay their debts through a series of monthly payments.

An IVA allows you to consolidate all of your unsecured debts – including credit cards, store cards, and payday loans – into a single monthly payment which is based on your affordability. These payments are then distributed among your creditors as partial repayment of your debts.

You will make your monthly payments for a fixed period, usually five or six years, after which any remaining debts will be written off by your creditors, leaving you free to rebuild your financial life.

What does it mean to be mis-sold an IVA?

While most IVA providers do their best to help match clients with the best solution for their individual circumstances, unfortunately there are certain bad actors out there who take advantage of customers through mis-selling.

Being mis-sold an IVA is what happens when people deal with a suspect IVA company, are given poor quality advice, and are then forced into an IVA when it’s not necessarily the most suitable solution for them.

IVA mis-selling often involves people signing up to the arrangement when they don’t fully understand what it involves. The IVA provider may rush through the process in order to claim a fee, and the result is often that the individual can’t afford their monthly IVA payments and therefore defaults on the agreement.

Who is responsible for overseeing my IVA?

Even if you’re in debt and have been in direct contact with your creditors about a repayment plan, you won’t be able to set up an Individual Voluntary agreement on your own. An IVA can only be set up by an Insolvency Practitioner.

An Insolvency Practitioner (or IP) is a licensed debt professional empowered by the Insolvency Practitioners Association (IPA) to set up and manage debt solutions like IVAs and bankruptcy.

It’s your IP who will help you draft an IVA proposal that allows you make an affordable monthly payment to your debts and avoid bankruptcy. Once your IVA agreement kicks in, your IP will handle your payments and ensure they’re shared among your creditors.

Essentially, it’s your Insolvency Practitioner’s job to oversee the creation and successful completion of your IVA, and they have a responsibility to step forward if they feel you’ve been badly advised.

Write off up to 81% of unaffordable debt.

Creditfix have helped over 182,000 people in the UK with their debts.

We can help you avoid bankruptcy

Stop nasty phone calls from creditors

Make one affordable monthly payment

What are the signs that I may have been mis-sold an IVA?

Even for people who have done their research on IVA providers and have entered into a legally-binding arrangement, they may later realise that something isn’t quite right. Below are some warning signs that you may have been mis-sold an IVA.

You’re asked to pay IVA fees upfront

There are various costs associated with setting up and managing an IVA, so you should expect to pay your IVA provider some sort of fee that allows them to cover their costs.

That said, legitimate companies will allow you to pay in monthly instalments as part of your debt repayment plan so you shouldn’t have to pay any money over and above your monthly contribution. If a provider asks you to make a big payment upfront, you should be wary.

You’re asked to make extra payments

Under the terms of your IVA, you should only make one payment per month towards the arrangement. That payment will cover the full amount you’re paying towards your debts, as well as any fees charged by your IVA provider.

You therefore shouldn’t be making any ‘extra’ payments on top of your monthly contribution. If your IVA company or Insolvency Practitioner asks for payment that isn’t part of your IVA proposal, it could be an indication you’ve been mis-sold.

You’re struggling to meet your monthly contribution

One of the most obvious signs you’ve been mis-sold an IVA is if you’re struggling to make your monthly payment.

When an IP draws up your IVA proposal, the level of your monthly payment is based on your finances. You should only be paying an amount you can afford towards your debts.

If you’re struggling to meet your monthly contribution each month, especially if it’s from the start of the arrangement, it could be a sign that a bad-faith adviser has forced you into an IVA when you weren’t suitable for one.

Who is liable if I feel my IVA was mis-sold?

While IVA firms and debt management companies offer IVAs, they’re not actually liable if you feel your IVA was mis-sold. That responsibility lies with your Insolvency Practitioner.

As the arbitrator and administrator of a legally-binding agreement, your IP is personally liable for your IVA. If you feel you have a strong case for being mis-sold an IVA and want to take legal action, then you would sue your IP rather than the company.

We have a wide range of debt management solutions that could help you write off up to 81% of your debts

Check if you qualify

What can I do if I feel I’ve been mis-sold an IVA?

It’s a horrible feeling to have entered into an agreement to deal with your debts, only to realise an IVA isn’t the right solution for you. If you feel you have been mis-sold an IVA, or that your Insolvency Practitioner has acted improperly, here are some steps for you to take.

Get in touch with your Insolvency Practitioner

Even if you’re worried you’ve been mis-sold an IVA, you shouldn’t jump straight to discussing legal action. Instead, you should get in touch with your Insolvency Practitioner to discuss the issues you are having.

Approaching your IP and having an honest conversation about the issue first may allow you to resolve the situation or clear up any crossed wires. And even if it doesn’t, discussing the problem with your IP allows you to get a better understanding of your case if you then decide to take things further.

Lodge a complaint with your Insolvency Practitioner

If you’ve taken the issue to your Insolvency Practitioner and you weren’t satisfied with their response, the next step is to lodge a formal complaint with your IP.

The complaint process should be laid out somewhere on the website of your IVA provider. Make sure you read the process carefully and follow each of the steps. If you’re concerned about making a mistake, sites like debt camel, or debt charities like the Money Advice Service or your local Citizens Advice Bureau, should be able to offer their support.

Lodge a complaint with the Insolvency Service

If the complaint lodged with your Insolvency Practitioner remains unresolved, it’s time to go external. This means complaining to one of the regulatory bodies that either oversee the IVA process, or are responsible for regulating the activity of Insolvency Practitioners.

Which regulatory body you lodge a complaint with depends on your individual circumstances, but some possible options include:

Insolvency Service: The Government department responsible for regulating the insolvency profession.

Insolvency Practitioners Association: The professional body that empowers Insolvency Practitioners to oversee legally-binding debt solutions.

Financial Ombudsman: An organisation that settles complaints between consumers and businesses that provide financial services.