As I drifted off to sleep last night a thought flashed through my mind, “Is an Individual Voluntary Arrangement (IVA) a right or a privilege?”

I’m not sure that I have any definitive answers to the question but there are certainly some issues that make me wonder why creditors treat people with debt problems as poor dumb bastards, thieves and crooks and then creditors act in concert to prevent good people from access to fair debt solutions like the IVA.

So let me see if I’ve got this right. Bankruptcy is a right because it is a statutory action that people can take to eliminate their debt completely. An IVA allows debtors to repay what they can reasonably afford to pay, in a fair and sustainable repayment plan and creditors consider that to be a privilege. Strange.

Bankruptcy falls under the auspices of Mike Norris and the other fine people of the Insolvency Service. Bankruptcy is a right. Individual Voluntary Arrangements came about as a result of government regulation and fall under the auspices of the Insolvency Service, and creditors feel they are a privilege. Odd.

Food and Credit

So then I thought about other things in life and how we treat them. The nearest thing in life to credit, is food. Both are legal substances and things that we normally consume every day. But if you overeat the NHS can provide you with inexpensive and cheap drug treatment to assist you in extreme weight loss. If even more drastic measures are called for the NHS will provide free surgery to help the fight to return you to health. And these are rights as a UK citizen.


So let me see if I understand this clearly. If I have found myself overeating due to depression, life changes, unexpected circumstances, out of balance brain chemistry, subconscious messages or have been influenced by food marketing messages, then the government will support my right for free or nearly free treatment. But if my debt, which is the symptom of the depression, underlying life issues, money personality, brain triggers or the belief in marketing messages, and that creates financial hardship or stress, then my will and desire to repay is not protected as a right? Weird.

If you want to read the hidden feelings and thoughts of people suffering from money troubles, then take a look and read the confessions of debtors on the Myvesta site.

Doesn’t it seem perplexing to you also that it is the UK government that gives debtors a legal right to discharge their debt but that creditors claim that an IVA to repay your debt falls under their total control?

People living through financial failure deserve access to professional debt help from licensed and regulated Insolvency Practitioners and others, a chance to repay their debt in a binding and formal way that protects their rights that allows them to live in safety and, that provides a definitive time at which they will be able to emerge from their penance and return to being strong and productive members of our consuming society again. That all seems perfectly reasonable and logical doesn’t it? Don’t we want to encourage people to repay?

Do we want the snack food industry controlling access to weight loss programmes? No, we would think that position to be ludicrous. So do we want creditors to get to control debtor access to professional, caring and compassionate solutions? No, but they do, and we let them do it anyway. What the hell is wrong with us?

Creditors Are the Dumbest Smart People I Know

It seems that people in debt problems fall into two major camps. We have one camp that is comprised of people that have experienced an unusual or unexpected event in their life and that has turned their financial world out of order. The other camp is comprised of people that should possibly not have had access to large amounts of unsecured credit to begin with. This camp, either thorough their past credit actions or current demographics, should be easy for the super-computers at the creditors to identify.

But these fringe credit candidates, that the industry loves to call “sub-prime”, are very profitable since the creditors can charge them high rates and fees as a privilege of having access to credit. So creditors keep lending out into the fringe because they are addicted to the profits they can rake off these people. At what point does that behaviour become reckless and avoidable through modeling and computation?

I heard on the BBC radio the other day while I was driving home, about a farmer that had been almost put out of business by the tragic flooding in the South. Then he learned that his cattle were now impacted by the foot and mouth disease warnings. Sounds a lot like 2001 when we were worried about farmer suicides from foot and mouth problems.

So if he can’t repay his consumer debt because of these events and proposes an IVA that is rejected because it does not meet the creditor hurdle rate for acceptance. Is that fair, just or right? And if not, what recourse does he have?

More Governmental Tools to Eliminate Debt

Another new tool, besides bankruptcy to eliminate unsustainable debt is the Debt Relief Order (DRO). The DRO will soon be available for debtors to easily eliminate debts. Debt relief orders are designed to give those who have debts of £15,000 or less, assets of less than £300 and surplus income of less than £50 per month the opportunity to apply for an order that will lead to the debts being discharged after one year. The cost for a Debt Relief Order is estimated to be £75.
 
It is interesting that the Insolvency Service says on their DRO page, “Those whose financial circumstances improve during the order will be expected to make arrangements to repay their creditors, and there will be civil and criminal penalties for those who abuse the system.” But the situation that we are facing with IVAs is that creditors are currently rejecting offers from people that want to repay their debt. Then creditors do what they can to vilify consumers, Insolvency Practitioners and restrict access to the IVA by setting hurdle rates, etc.

At what stage does forced social exclusion, disadvantage and modern debtor slavery turn into potential corporate liability, civil and criminal charges? So if a consumer can repay under a DRO and does not, they may be subject to civil and criminal penalties but a creditor that refuses repayment has no consequences?

So if a creditor refuses a fair, reasonable and sustainable Individual Voluntary Arrangement (IVA) proposal and that action leaves me wandering in debt, depression and lack of safety, at what point is that criminal since they have knowingly left me in danger and without a fair and reasonable way to repay my debt that protects my rights?

If an employer discriminates against me because I’m overweight, I have a lot of legal remedies and protections but if my creditor discriminates against me because I’m over in debt to them and they refuse my repayment attempts, it is their unilateral choice to do that? Who protects my right to repay my debt?

Now if you think I’m being too extreme here. Let me share with you a series of quotes from creditors and their representatives about recent IVA proposal rejections.

“We can’t accept that monthly payment. It needs to be higher and we suggest that she stop wearing contact lenses and wear glasses instead.”

“I don’t care that his elderly father lives so far away, he can visit just twice a month and save money on petrol that can be used to repay more”

“We will not accept this IVA because he needs to repay 40 per cent of his debt and this proposal only repays 37 per cent. Tell him to go bankrupt if he can’t afford it.”

“I understand that if he is forced to make that increased monthly payment that he will barely have enough to live on and the IVA will fail, but that really isn’t my problem.”

“I realize we gave her credit when she was on benefits but we don’t accept IVAs from people that are on benefits.”

“We refuse to accept his IVA repayment offer for £20,000.” Letter from different department at same creditor. “We will gladly accept £15,000 as a full settlement of this debt.”

If any Insolvency Practitioner out there has been told any other ridiculous reason from a creditor for not accepting an IVA, please post them in the comments section below. Let the world really see what people are being told by creditors that want to repay their debt in an IVA.

Isn’t It Time?

Isn’t it time that the government makes it a statutory right for consumers that want to repay their debt to have some protected rights to allow them to do so? It seems perfectly logical that it should be a right for a debtor to have access to an IVA, without creditor rejections, so they can enter into a fair, binding, reasonable and sustainable repayment scheme rather than to be shunned and turned away by creditors when they want to do the right thing.