Watch out for this mis-sold IVA letter scam

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This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved. Please visit our website for more information.

Beware of bad IVA advice

Beware of bad IVA advice

For the past few years we’ve constantly warned our individual voluntary arrangement (IVA) clients about scam letters that try to take advantage of people with IVAs.

We’ve heard lots of stories of our IVA clients receiving ‘mis-sold IVA’ letters. These letters usually inform them that they’ve been mis-sold the debt solution and that the company can either help reduce payments to creditors or “get the debt written off” to be “debt free sooner”.

View a mis-sold IVA letter (PDF), sent to a client of ours in 2010 – this company had their consumer credit licence revoked by the OFT last year.

It’s telling that these letters, sent out in bulk, can somehow assume an individual IVA was mis-sold without seeing or reading the IVA proposal. Unsurprisingly it’s rubbish.

What are they trying to sell?

When someone’s subject to an IVA their name and address is listed on the insolvency service website. As this is a public register of insolvencies it means anyone can access the details. On a regular basis we hear about fee-charging ‘companies’ taking advantage of this access for their own ends.

These companies write to IVA clients and use scare tactics to try and get the client to fail their IVA as they’re selling a service like ‘assisted bankruptcy’. The firms charge £600 to fill in a bankruptcy form.

Going bankrupt currently costs a total of £700 in fees; £175 to the court and £525 to the official receiver. These companies are trying to get the person to go bankrupt so they can charge fees on top of this for filling out the forms, irrespective of whether it’s the best solution or not.

Most IVA clients who receive these scam letters don’t realise what service they’re being tempted by and on a few unfortunate occasions we’ve known people who’ve failed their IVA after taking advice from these companies only to later realise that bankruptcy is not in their best interest (in some cases we’ve had to help client’s re-propose IVAs having failed them based on advice from these scam companies).

What should I do if I get a letter?

If you’re on an IVA with us and you receive a similar letter remember that your name and address is on a public register. It’s also important to remember that the companies sending these letters are completely motivated by profit and are often neither legitimate nor properly registered to give financial advice.

Take everything the letter says with a very large pinch of salt and get in touch with your IVA case worker if you’re concerned.

If you’re on an IVA and receive a letter like this we’d recommend that you ignore it but don’t “file it in the shredder”; instead forward it into us and we’ll try as hard as possible to stop this sharp practice.

Matthew worked as an IVA drafter prior to working in social media. In a former life he wrote scripts for Eastenders, Emmerdale and Hollyoaks. He has 3 chickens, 2 dogs and a rabbit.

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  • Darren

    However there is no law to stop companies sending these letters out and to be fair there are some very reputable companies out there who do help people with bankruptcy by providing a full professional and impartial service. Just because one companies bad actions result in slatting it on a website, does not mean all the others are the same.
    Unfortunately IVAs are mis-sold regulary and we see this as a growing trend week in week out. I am an experienced debt advisor and I advise on all of the UKs current available debt solutions and not just one or two which most IVA companies will only do. I have seen the problme of mis-selling grow and grow and there are some shocking cases from some very well know IVA companies.
    I would say to people that they need to consider their sitaution and do ask the question ‘Have I been advised on everything fully and correctly’…
    If you have doubts then there is nothing wrong with speakign toa professional debt advice company who will asess your actual financial situation properly.

    • Hi Darren and thanks for your comment.

      We wouldn’t disagree that some IVAs have been mis-sold in the past, but the answer to this is not to follow up on unsolicited mail from companies that are not licenced to offer any sort of debt advice.

      If you’re subject to an IVA the first person you should speak to is the Insolvency Practitioner – the Supervisor of your IVA. The Supervisor is duty bound to give you advice regards the IVA and your financial circumstances; this includes advice about bankruptcy. If you find that the Insolvency Practitioner is not helpful you can complain about them through the Insolvency Service.

      There is nothing wrong with taking debt advice if your IVA has failed. However there is never a need to pay a fee for this service as CCCS and other charities offer debt advice free of charge.