The British Bankers Association (BBA) are to review whether or not there is a case for ‘home inspectors’ to be used as part of the Individual Voluntary Arrangement (IVA) application process, in their effort to reduce the amount of Individual Voluntary Arrangements (IVAs) that are being applied for.
The major banks in Britain are becoming increasingly alarmed at the number of Individual Voluntary Arrangements (IVAs) being applied for, and are convinced that this increase in due to the higher profile of the Individual Voluntary Arrangement (IVA) brought about by the widespread advertising of Individual Voluntary Arrangements (IVAs) by Debt Management Companies.
The banks maintain that the aggressive marketing of Individual Voluntary Arrangements (IVAs) as a debt solution, is to blame for the rise in the bad debt problem in the U.K..
the banks suggest that Debt Management Companies are looking to capitalise on the fees they can expect to draw from clients who choose to enter an Individual Voluntary Arrangement (IVA).
They believe that if client wishing to enter into an Individual Voluntary Arrangement (IVA) were to be visited at home as part of the Individual Voluntary Arrangement (IVA) process, there would be a reduction in the number of client’s Individual Voluntary Arrangements (IVAs) failing to complete the full 5 year duration, which at present stands at 35% and 40%.
Home visits are already compulsory in Scotland for people wishing to enter into a Trust Deed, the Scottish equivalent to the Individual Voluntary Arrangement (IVA), and failure rates are comparatively lower than Individual Voluntary Arrangements (IVAs), with fewer than 5% failing to complete.
The BBA believes that visits to the debtor’s home will also enable there to be a more realistic assessment made of each debtors circumstance, which in turn would lead to a more accurate selection of which debt solution would be the most appropriate in each circumstance.
The BBA now plans to carry out research into the viability of the ‘home visits’ theory, which inevitably will increase the costs of the Individual Voluntary Arrangement (IVA) process.