Monday, June 11, 2007

 

A meeting was held earlier in the week between insolvency practitioners and the banks in an effort geared toward the formulation of an agreement on certain key areas of individual voluntary arrangements (IVAs). IVAs have gained popularity as a way of managing debt problems that have escalated because of grown in UK personal debt. These agreements are legal contracts between the debtors and lenders that allow the borrowers to write off a portion of their debts while repaying the remainder over several years.

 

IVA companies make their profits by charging a fee to the banks for handling the repayment plan, and these fees can range from £4,000 to £8,000. Some banks feel these fees are high and are asking the insolvency practitioners to review them.

 

Both banks and IVA companies are anxious to provide the details that will resolve the issues once and for all.

 

Eric Leenders of the British Bankers Association spoke on BBC Radio Five Live and stated that he wanted to see the implementation of some proposals that will be equitable for both sides. Part of that would mean to process efficiencies, which would help consumers since the paperwork would be simpler and much more accessible.

 

Nick O'Reilly, vice president of the Association of Business Recovery Professionals had previously stated that he welcomed the opportunity offered by the meeting and felt a lot of progress had been made in the months preceding the meeting. His feeling was that the banks don't realize all of the work that goes into putting together an insolvency package for a debtor.

 

O'Reilly felt that developing a system where the insolvency practitioner receives a portion of the fee upfront and the remainder later was a system that would prove the most helpful to all involved.