Dealing with debt is never easy, and if you’re considering an Individual Voluntary Arrangement (IVA), finding the right company to handle it is just as important as the decision itself. With so many firms making big promises, it can be difficult to know who to trust and which IVA companies to avoid.
In this guide, we’ll help you understand what to look for, how to spot red flags, and what questions to ask before committing. The aim is to give you the confidence to choose a reliable provider and move forward safely with your debt solution.
Understanding IVA Companies
IVA companies specialise in the establishment and management of IVAs for individuals with a debt amount exceeding £6,000.
Their objective is to provide debt solutions tailored to their clients’ unique financial situations, helping them regain control of their financial future.
Creditors are not obligated to accept an IVA proposal, but a well-prepared proposal guided by professional IVA advice can significantly improve your chances of success.
However, not all IVA companies are created equal.
Selecting a reliable IVA company is critical to ensuring that your individual voluntary arrangement, a legally binding agreement, is managed effectively and in your best interest.
A bad IVA company can cause more harm than good, exacerbating your financial challenges.
In this guide, we’ll explain the warning signs that could indicate problems with an IVA provider, helping you spot questionable practices before entering an agreement.
Want to find out more about how PennyPlan can help you with your debt?
What Should You Look For In An IVA Company?
Choosing an IVA company isn’t just about finding someone who can arrange an IVA. You need to feel comfortable that the solution is right for your circumstances and that you understand what you’re agreeing to before you commit.
A good provider will take the time to learn the specifics of your financial situation and explain everything you need to know. This includes the costs, potential drawbacks, and other debt solutions that are available. They won’t just make an IVA sound like the best and only option before they’ve properly assessed your circumstances.
If you’re looking for an IVA company and need more information, check out our other guide covering the Best IVA Companies in the UK.
IVA Companies To Avoid: Red Flags You Need To Know
When identifying IVA companies to avoid, it’s essential to be aware of the red flags that signal potential issues.
Some of the key warning signs of an untrustworthy IVA company include:
- The charging of upfront fees
- Unrealistic promises
- Evasion of responding to queries
- Unsatisfactory customer reviews
In the following subsections, we’ll explore each of these red flags in more detail, so you can make a well-informed decision when choosing an IVA company to manage your debt.
Charging of upfront fees
The charging of upfront fees is a major red flag when assessing IVA companies.
Reputable companies do not require any payments before an IVA is approved.
All insolvency practitioners will have ongoing fees, but these should be integrated into your IVA payments and not require separate payments.
Any upfront fees indicate that the IVA company is more focused on obtaining your funds rather than acting in your best interests, such as helping you establish affordable monthly repayments for your IVA.
By avoiding companies that charge unnecessary fees, you’ll be better positioned to achieve a successful outcome and regain control of your finances at the completion of the solution.
Unrealistic claims
Unrealistic claims are another warning sign to watch out for when selecting an IVA company.
Be cautious of companies that discuss extremely low repayments without discussing your income and expenditure or promise to write off an exact percentage of debt without discussing your creditors.
These unrealistic promises can lead to not correctly assessing how much IVA payments will leave you to live on. This only causes disappointment further down the line and increases an IVA company’s failure rate.
By steering clear of companies that make unrealistic claims, you’ll increase your chances of successfully addressing your debt issues and achieving financial stability.
Evasive answering of questions
A company being evasive when you ask routine questions about the IVA process is another surefire way of discovering IVA companies to avoid.
Untrustworthy companies may exhibit this behaviour around simple questions such as ‘How do you make your money?’ or ‘What are the negatives of an IVA?’.
By attempting to be evasive during basic questioning that helps you understand the process, it suggests that the debt advisor may be trying to omit information that they feel you may not deem favourable.
By being aware of these signs, you can avoid IVA companies and debt management companies that may not be acting in your best interest and focus on finding a company that is transparent, reliable, and committed to helping you resolve your debt issues.
Poor customer reviews
Customer reviews are a valuable resource for evaluating the quality of service and dependability of an IVA company.
Be sure to check customer feedback on reliable, independent review platforms such as Feefo reviews, as well as the company’s own website.
Take note of any recurrent expressions of dissatisfaction, such as grievances concerning customer service or the quality of the IVA process.
If a company is reluctant to disclose the location of reviews, exercise caution, as this may suggest they have something to conceal.
By paying close attention to customer reviews and testimonials, you can make an informed decision when choosing an IVA company and ensure the best possible outcome for your financial future.
Promise to write off a specific percentage of your debt
Be wary of companies that promise to write off a specific percentage of your debt before they’ve assessed your circumstances. Claims such as “write off 90% of your debt” can make an IVA sound more predictable than it really is.
The amount you repay depends on your individual circumstances, including your income, expenditure, assets and debts. A provider should assess your situation before giving you an indication of what an IVA could look like.
Pressuring you to sign up quickly
You shouldn’t feel rushed into entering an IVA. If a company repeatedly tells you that you need to sign up immediately, discourages you from getting independent advice, or makes you uncomfortable asking questions, take a step back and reassess.
An IVA is a serious financial commitment. You should have enough information to understand the arrangement, its costs, and its potential consequences before agreeing to it.
They tell you to change your income or expenditure
Be extremely cautious if an adviser suggests changing the figures you provide about your income or household spending so that you qualify for an IVA. Your financial assessment needs to reflect your actual circumstances. An IVA payment that looks affordable on paper but doesn’t reflect what you genuinely spend could become difficult to maintain.
The FCA specifically warns consumers not to be coached into misrepresenting their income or expenditure to enable them to qualify for an IVA.
The Role of Insolvency Practitioners
Insolvency practitioners play a crucial role in managing IVAs.
Your licensed insolvency practitioner is responsible for overseeing the entirety of an individual voluntary arrangement, ensuring its legality.
They are tasked with administering IVAs for their clients, which includes formulating IVA proposals, presenting it to creditors, and overseeing the IVA for its duration.
Selecting a qualified and experienced insolvency practitioner is essential to ensure that your IVA is handled proficiently and that your interests are duly considered.
By choosing a professional with the right expertise, you can increase your chances of a successful IVA, leading to a brighter financial future.
How Much Do IVA Companies Charge?
IVA fees vary between providers and arrangements, so there isn’t one standard price that applies to everyone. GOV.UK states that there are usually two fees involved: a set-up fee and a handling fee each time you make a payment.
The FCA warns that IVA fees often cost several thousand pounds and are usually taken from the monthly payments you make into the IVA. This means it’s important to understand how much you’re paying in fees and how those costs affect the money available to your creditors.
Questions To Ask Before Choosing An IVA Company
You don’t need to be an expert in debt solutions to ask the right questions. Before agreeing to an IVA, make sure you understand:
- Why is an IVA suitable for my circumstances?
- What other debt solutions could I consider?
- How much will my IVA cost in total?
- Who will manage my IVA?
- How much will I pay each month?
- What happens if my circumstances change?
- What happens if I can’t maintain my payments?
- How could an IVA affect my home or other assets?
- What happens if my IVA fails?
- Can I take time to consider my options before agreeing?
If a provider can’t answer these questions clearly, that’s a good reason to pause before making a decision.
Comparing IVA Providers?
Knowing the warning signs can help you spot IVA companies that may be worth avoiding. Poor advice or an IVA proposal that hasn’t been properly prepared could also increase the risk of your IVA being rejected by creditors.
If you’re comparing providers and want to know what to look for, read our guide to the best IVA companies.
How To Apply For An IVA
Once you’ve found a provider you’re comfortable with, you might be wondering how to apply for an IVA. You’ll need to provide detailed information about your finances so your circumstances can be assessed. This includes information about your debts, income, expenditure and assets.
Your insolvency practitioner will use this information to work out what you can afford and prepare your IVA proposal. Your creditors then vote on the proposal, and an IVA starts if creditors holding at least 75% of the value of the debts that vote agree to it.
Seeking Professional Debt Advice
Before committing to an IVA or any other debt solution, it’s crucial to seek professional debt advice.
Obtaining expert guidance can provide numerous benefits, such as an objective perspective on your financial situation, assistance in becoming aware of all your debt options, and support during creditor negotiations.
By consulting with a professional debt advisor, you can:
- Gain a clearer understanding of your financial situation
- Explore all available alternatives before making a decision
- Ensure that you choose the most suitable debt solution for your circumstances
- Maximise your chances of achieving lasting financial stability.
What If An IVA Isn’t Right For You?
While Individual Voluntary Arrangements can be an effective solution for many individuals struggling with debt, it’s important to consider other debt solutions that may be more suitable for your unique circumstances.
Alternatives to IVAs include
- Debt Management Plan
- Debt Relief Order
- Debt Consolidation Loan
- Bankruptcy
More information on these solutions can be found by clicking their respective link above.
By considering all available options and seeking professional debt advice, you can ensure that you choose the most appropriate debt solution for your financial situation through a reliable debt advice service.
How to Report Unethical IVA Companies
If you encounter unethical practices by IVA companies, it’s important to report them to their relevant regulatory body to ensure other people do not have to suffer the same fate.
Here are the steps you can take.
- Communicate with your insolvency practitioner and submit a written complaint.
- Contact their regulatory body, such as the IPA, ICAEW or the FCA.
By reporting unethical IVA companies, you can help protect other vulnerable individuals from falling victim to their deceptive practices.
Remember, your voice matters, and standing up against unethical behaviour can contribute to a more transparent and honest insolvency industry.
Checks to Make Before Agreeing to an IVA
Before agreeing to an IVA, it’s worth checking the company carefully and considering the warning signs covered in this guide. Clear information about fees, the IVA process and who will manage your arrangement can help you spot potential problems before you commit.
Keep these points in mind:
- Look out for red flags such as upfront fees, vague answers or unrealistic promises.
- Check that the insolvency practitioner responsible for your IVA is properly licensed and regulated by an official insolvency body.
- Read verified customer reviews and look for recurring complaints or concerns.
- Be cautious if you feel pressured towards a particular debt solution without your wider circumstances being properly considered.
- Seek professional debt advice before committing to an agreement so you understand the options available to you.
Summary
Before entering an IVA, take time to check who you’re dealing with and understand exactly what you’re agreeing to.
Upfront fees, pressure to sign quickly, unrealistic promises, unclear answers and attempts to alter the financial information you provide should all be treated seriously. You should also be able to identify the licensed insolvency practitioner responsible for your IVA and understand the fees involved before proceeding.
If something doesn’t seem right, ask further questions or seek professional debt advice before making a commitment.
Want to find out more about how PennyPlan can help you with your debt?
Frequently Asked Questions
Who is the best company to go with for an IVA?
If you have decided an IVA is your best option to resolve your debts, we believe PennyPlan would be the best company to manage your solution.
As an ethical IVA provider, we care about helping you on the road to debt freedom.
However, we also recognise the mental toll debt strife can cause.
This is why we offer mental wellbeing services in addition to your IVA that you can use at any point you require during your time with us.
Do I need to meet a good IVA company in person?
You do not need to meet an IVA company in person; however, there should always be an option to do so if you wish.
Typically, IVA companies work on a telephone basis, with paperwork being sent to you to review and sign.
Is there a bad side to an IVA?
All debt solutions have their pros and cons, and an IVA is no different.
An IVA negatively impacts your credit rating and your ability to obtain credit for the term of the agreement.
Does an IVA take all my money?
No, an IVA doesn’t take all your money.
An IVA determines an affordable monthly payment that is based on what is left after you have paid your monthly household bills and living costs. This is what is known as ‘disposable income’.
Why would an IVA be refused?
Creditors have the option to refuse an IVA. A rejection of an IVA proposal at the Meeting of Creditors can happen for various reasons, such as a low return in payments returned to the creditors to make it a worthwhile agreement.
Once accepted, however, it is a legally binding contract, and your creditors are bound by the terms of the agreement.
What is the main objective of an IVA company?
The main objective of an IVA company is to provide tailored debt solutions, aiding clients in regaining control of their finances.
These companies work with clients to create a plan that is tailored to their individual needs and circumstances. They provide advice and guidance on how to manage debt, as well as helping to negotiate with creditors to reduce payments.
How do I check if an IVA company is legitimate?
Check that the company’s Insolvency Practitioners are licensed with a recognised body such as the IPA or ICAEW. You can verify this on the regulator’s website.
What should I do if I think I’ve chosen a bad IVA company?
If you’re concerned about how your IVA is being managed, raise a complaint directly with your Insolvency Practitioner. If things don’t improve, contact their regulator for further support.
Can I cancel my IVA if I’m unhappy with my provider?
You can request to end your IVA, but this can have serious consequences. Always speak to a debt advisor first to explore safer alternatives.
What should I ask about IVA fees?
Before agreeing to an IVA, ask the provider:
- What are the total fees for my IVA?
- How will the fees be paid?
- When will the fees be taken?
- How much of my monthly payment will go towards fees?
- Are there any other charges I should know about?
- What happens to the fees if my IVA fails?
Don’t be afraid to ask for the information in writing. If you don’t understand the charges, ask the provider to explain them before you agree to anything.
