Here at StepChange Debt Charity and StepChange Voluntary Arrangements, we welcome the changes to the IVA Protocol that have now been agreed by the IVA Standing Committee. These will enable a degree of forbearance and flexibility to be shown on Individual Voluntary Arrangements to manage payment difficulties arising from the coronavirus crisis.
In essence, the changes enable Insolvency Practitioners, subject to receiving the necessary evidence, to allow the equivalent of 3 months additional payment breaks or reduced payments on top of any existing flexibility.
Broadly, this means that people using an IVA as a solution to manage their debt will have access to similar levels of temporary support as those being offered by many lenders to their customers. This should reduce the incidence of IVAs prematurely being forced to terminate, a route which results in high costs and a loss of the protections that an IVA provides.
We also welcome the inclusion in guidance issued by the IVA Standing Committee that Insolvency Practitioners should be particularly mindful of the source of the introduction of potential IVA clients during this period.
Unscrupulous “lead generators” are a scourge in the IVA market at the best of times, and the charity has already seen examples of opportunistic advertising aimed at people worried about their finances in the wake of the coronavirus crisis for whom an IVA may not be the most appropriate debt solution.
Peter Tutton, Head of Policy here at StepChange Debt Charity, says:
“It is only right that people using an IVA to manage their debt problem should be able to gain access to a bit of flexibility if they face a sudden income shock as a result of the coronavirus crisis without automatically triggering the very expensive termination process.
"The IVA Standing Committee has recognised the need for a prompt approach, consistent with wider market practice, which is a helpful emergency response. Anyone worried they cannot meet their IVA payment as a result of income shock needs to contact their IVA provider as soon as possible to explore their options.”
Peter Wordsworth, Head of Insolvency and of StepChange Voluntary Arrangements, adds:
“For those of our clients who are currently using an IVA to repay debt, this provides valuable reassurance that we have a degree of flexibility available to us to help them manage temporary payment problems, if they are eligible for this support.
"We must emphasise that if you can continue to pay as normal then you should – and you must talk to us before missing or changing any payment.
"Any missed payments still have to be made up and may extend the length of your IVA, so this is not a route to be taken lightly, but the increased flexibility will be a valuable way of reducing the risk of an IVA having to terminate early with all the cost and loss of protection that entails.”