Creditors get tough on IVAs

THURSDAY, NOVEMBER 23, 2006

[A debt counsellor has claimed creditors are putting stricter budgets on people claiming individual voluntary arrangements (IVAs) following suggestions that around 20 per cent fail before the end of their five year tenancy.]

Creditors are becoming stricter with debtors entering individual voluntary arrangements (IVAs), a debt counsellor has reported.

James Falla from Thomas Charles has claimed credit companies have imposed tougher budgets on people over the past 12 months.

He said: "Often the creditors will look at the income and expenditure of the individual and they will really tighten down on the amount that they will allow people for housekeeping and things like that.

"They will not allow them any room for manoeuvre at all and I think that this situation is going to cause a problem."

He added this could lead to an increasing amount of people becoming bankrupt.

A Thomas Charles survey, published on November 2nd, suggested one in five adults - or 8.4 million people – had unsecured debts of over £10,000 during October.

The report claimed around 1.4 million felt they were 'likely' or 'certain' to declare themselves bankrupt or take out an IVA.

Mr Falla warned people thinking of IVAs that: "You have to stick to pretty strict budgets and that's not something that should be taken lightly by anybody."

His comments follow suggestions from Debt Free Direct that between 20 and 30 per cent of IVAs fail before the end of their five year tenancy.