Which are the best IVA firms to talk to if you are interested in an Individual Voluntary Arrangement (IVA) and whether it is a good debt solution for you?
If you put IVA into Google, how do you decide which of the tempting see how much of your debt you can write off links to click on? Or you could choose the person that cold calls/texts you telling you about a little-known government scheme.
Those are seriously bad ways. These firms are advertising, cold calling and paying a lot of money to get high up on Google’s pages because they expect to make hundreds of pounds by selling your details to an IVA firm, who will then make thousands of pounds in IVA fees.
An IVA may be a great option for you, but you need good advice from someone whose main interest isn’t their own fees!
Tens of thousands of people a year may be sold an IVA when there is a better (cheaper, quicker, less risky) debt solution for them. The regulators are trying to reduce some of the IVA mis-selling, but that won’t help you at the moment.
You could put your postcode into the Insolvency Service Find an Insolvency Practitioner page. But that doesn’t tell you much, especially if you don’t particularly need a local person and would be happy to talk over the phone to anyone.
IVA firms are not all the same
This problem wouldn’t be important if the IVA and sort of service you end up with are the same whichever firm you use.
But IVAs aren’t like that. They are long-term commitments can go wrong. Even if everything goes well in your life, you will be having annual reviews. If you have unexpected expenses or reductions in income, you are going have to talk to your IVA firm about what your options are.
Don’t explain what may happen in your IVA
You need to know what will happen to your mortgage, your pension, your car finance, what if you get a pay rise or a bonus, what if you need to move house etc.
All too often problems in these areas are not discussed before you start an IVA.
Failure rate
IVA failure rates were running at about a third. Covid then complicated these statistics, with temporary measures to prevent IVAs failing. The Insolvency Service says there are some indications that termination rates are falling. But even if they drop to one in four, that is a lot…
Anecdotally some IVA firms have much better failure rates. So you would want to choose one of those firms – but these failure rates by firm are not published, so you are choosing blind.
Length of IVAs
IVAs are usually promoted as “5 year arrangements” but problems and payment breaks often mean they go on for much longer.
Take the IVAs that started in 2017. By the end of 2023, those IVAs started 6-7 years earlier. The statistics show that at the end of 2023, of the 2017 IVAs:
- only 45% had completed;
- 33% had failed, leaving people back with their debts;
- 22% were still running.
For a product that is sold as a simple and affordable way out of debt in 5 years, this is a dismal track record.
Time to issue a completion certificate
Some firms get most certificates out in less than three months after the final payment, others have many IVAs still open more than 6 months later.
Level of fees
You may not think this matters, as the fees are taken out of your payments so they don’t cost you directly.
But if your IVA fails, you inherit some money, or you decide to sell the house and end the IVA early, then you do end up paying the fees.
Your IVA may be transferred to another firm
Some IVA firms will sell blocks of IVAs to a different firm. Others go out of business so all their IVAs in progress have to be transferred.
This can be very annoying if you were happy with your IVA firm. Often the firm taking over the business gets a big systems and administration problem transferring all the details.
The dreaded secured loan clause
Some firms try to make you get a secured loan at very high rates of interest in the last year of your IVA. You want to avoid these firms, but how can you tell which they are?
Does it make that much of a difference?
Yes it does!
Some firms are simply better than others – they won’t propose IVAs that have little chance of succeeding and they put more effort into working with you during an IVA to try to prevent it failing if things start to go wrong. Contact and support early on can make a huge difference to whether your IVA succeeds.
You should take glowing reviews with a huge pinch of salt. They were so friendly and helpful may have been right when the IVA started, but what about three years down the line?
You can’t change IVA firms if your IVA firm becomes difficult to deal with, so choosing the right firm at the start is important.
Why can’t the information be published?
I don’t think this sort of data is the only thing that matters. If you want to go for a small local firm then they won’t have hundreds of completing IVAs each year. I think consumers can cope with the idea that it’s not always best to go to the “top” firm if you find one that you are very comfortable with.
But I don’t think there is any good reason to keep customers in the dark about important facts. How is someone supposed to take one of the most important financial decisions of their life without any information?
I think the Insolvency Service should publish some data to enable customers to make an informed choice between IVA firms. But at the moment this isn’t happening.
So if you are looking at an IVA, I suggest you first talk to a free sector debt advisor such as National Debtline or your local Citizens Advice. So you start with advice that an IVA is suitable for you.
And if they say an IVA is your best option, I suggest you talk to StepChange. Their failure rate is a lot better than average, I see fewer complaints about their IVAs than most other large firms, and I have never seen them try to push anyone to take an expensive secured loan to release equity at the end of the IVA.
What you should ask an IVA firm that you are talking to
A good firm will make sure that you understand all the details of your IVA proposal. In particular:
- if you have a house you need to understand how the equity release in year 5 works. Ask for various examples based on your house value and mortgage to show when you would need to remortgage/get a secured loan and when you might need to make an additional year’s payments.
- ask the firm if it is their policy to make people take a secured loan. If they say you will have to consider it, ask what sorts of rates people are being quoted at the moment;
- make sure you when your pension could be affected, see Is my Pension safe in an IVA?
- if you have car finance ending during the IVA, ask the firm what your options will be. Do not be reassured by “oh that will be fine, you can get another finance contract” – that would be at a horrible rate of interest, probably over 30%.
Also ask who will administer your IVA. Some firms that set up an IVA then hand you over to a different firm to supervise the five/six year IVA. I don’t think this is a good idea. You also need to be able to have someone you can talk to about problems that occur, not be passed to some “warehouse” abroad where you are just another case number.
Is an IVA or bankruptcy better for you?
Could a Debt Relief Order help you?
Choose between an IVA and a DMP
AG says
the whole system is stacked against you. I spent a month choosing an iva firm I thought I could trust to find I was then sold to another firm and I had no right to object or move to someone else.
Lisa Thomas says
As one of the advisors on an IVA forum I am often surprised at the high level of complaints on there from debtors about the lack of service they receive from some of the big IVA ‘factory’ type firms once they are in their IVA.
They don’t seem to be able to ever speak to their IP who is often someone they have never met before.
Some firms also take 6 months to close cases, presumably because of their large case load they are unable to give cases the attention they require and the case is simply a number.
I may be bias but I would recommend a small local firm. Someone you can easily meet with if you have any problems.
I agree that you should shop around just like you would for any other trade. Meet the IP in person and see if you think you can work with them for 5-6 years. Speak to 2 or 3 companies so you are able to make a fully informed decision before deciding who to instruct.
Sara (Debt Camel) says
Hi Lisa,
I completely agree about lack of service / poor communications:
– Firms that don’t do annual reviews for several years, then do one and announce debtor has large arrears as their income has gone up, not taking account of increases in expenses.
– Firms who proposed payments breaks for someone with major health problems late on in an IVA where the obvious solution is to ask the creditors for it to be completed.
– Firms that tell debtors they need to get a secured loan who then back down when challenged. etc etc
It’s stressful but works out OK if the debtor comes here or to an iva forum such as theivaforum.co.uk and hears something sensible so they know what their options are and can go back and insist on clear answers from their IVA firm – but what about the many people who just assume their IVA firm is the expert and they have to do what they are told?
Michael Peoples says
Hi Sara
I work for a small/medium sized firm and our figures over the past eighteen years while I have been here have never varied too much. However during this time companies have come and gone with massive advertising budgets, offshore call centres, bulk purchasing of data, cold calling, texting etc. Companies that previously did huge volumes have all but disappeared and others have gone from nowhere to top five in the league table in very short periods of time.
It seems to me that most people who enter IVAs now are contacted directly beforehand by one of the major players and were not seeking IVAs in the first place. Where are these people getting their details from?
I agree entirely with the article but if people are being cold called, instantly sold an IVA and have a courier arriving soon afterwards to lift all the paperwork then they have little option of shopping around. They may not even know that there are alternative firms out there as this was the first time they had ever heard of an IVA so the cold calling and sale of data should be looked at.
I must also say I have been following your site and articles for some time. You do an excellent job and provide extensive and varied advice so I hope you get the recognition for your efforts.
Sara (Debt Camel) says
“Where are these people getting their details from?” unregulated lead generators probably! A huge topic and one for another article…
Michael Peoples says
That is a very professional looking website and having the logos of the various banks and MAS gives a certain authenticity to it. This raises a different question in that if these people cannot offer debt advice then they must be referring the cases on to IP firms. Which IP firms are buying the leads and are they aware that they are purchasing the leads from a firm which is not authorised?
Dean Smith - IP says
A good set of statistics may tell you what is happening if you have asked the right question, but typically they will not tell you WHY. So a high headline rate of failed IVA’s could be down to a myriad of reasons, not least a debtor decides not to pay and goes to ground avoiding contact with the IP.
The Accountant In Bankruptcy likes to publish annual failure rates of Protected Trust Deeds in Scotland, but does not seek to explain why. It’s a bit of a half done job in my opinion and is good for headline grabbing and possibly supporting a view point, such as Debt Arrangement Schemes are the best thing since sliced bread, but unless there is further analysis as to why the IVA (or PTD) failed how can an inference of culpability reasonably be drawn against the IVA/PTD provider ?
Sara (Debt Camel) says
There are always technical arguments against publishing statistics. This school’s poor performance in key Stage tests is a result of the low-level English as a first language, this hospital’s child heart surgery unit deals with the most complicated cases where you would expect the results to be below average, etc etc. Nevertheless, how is a debtor supposed to choose which IVA firm to go to without any information?
I would suggest that if a firm has a significant number of debtors “choosing not to pay and avoiding contact with the IP” then that firm has done a pretty poor job of explaining what an IVA involves to the debtor before it is set up.