The perils of commercial advice

[vivo]

A client came to us for advice as he has been tied in to an Individual Voluntary Arrangement (IVA) for over a year. The client's income is his State Retirement Pension and Pension Credit. He is 71 years of age and it is evident that his income is unlikely to improve. He suffers with heart problems and other health issues. His debts are all non-priority such as loans and credit cards and he was having difficulty paying them. Our client saw an advert on the television stating that he would soon be 'debt free'. He contacted the debt company and was soon signed up to the IVA. This was set up at £150 per month for 5 years. Our client has struggled ever since this was set up. He became in arrears with his rent and was in danger of eviction. In desperation he came to see us in the Legal Services at the Citizens Advice Bureau. We immediately advised our client to stop the payments and to notify the Insolvency Practitioners that he could no longer make the payments. We are in correspondence with the company who set up the IVA and our client is now considering bankruptcy as a way of resolving his debt situation. Our client has no assets or substantial income and should never have been advised to enter into an IVA given his low income. These companies do not consider the stress involved and the importance of paying priority debts. They appear only to be concerned with their own profits. Without 'Not for Profit' agencies like us people would be left at the mercy of these debt companies who appear to prey on many of the vulnerable!

[nickd]

Welcome VivO - a good post: Your client highlights how some commercial sector organisations are maybe just too focussed on remedies which revolve around profitability. In an Individual Voluntary Arrangement, the practitioner charges a fee as part of the plan. There are some firms who do so very responsibly, but there are also many who do this as part of an 'ambulance chasing' culture which has arisen out of people in debt - because there's money to be made.

I wonder how much of an attempt was made to ensure this client's income was maximised and also whether the firm involved in setting up the IVA fully assessed his income and expenditure using realistic figures related to the cost of living. It shouldn't be forgotten that firms who offer IVA's are regulated and employ fully skilled insolvency practitioner's, so one has to wonder why other options weren't explored?

Perhaps we've got an Insolvency Practitioner on Mylegal who would like to comment?