Things were moving along nicely with pushing the Simplified Individual Voluntary Arrangement (SIVA) forward to give debtors more options to deal with difficult debt other than a less secure and non-binding debt management plan and more severe and traumatic bankruptcy, and then it got nuked.

The Individual Voluntary Arrangement (IVA) has been under creditor assault for a couple of years now. Let's be honest, while the IVA is a government sanctioned debt solution the creditors have been pulling the strings on how it will be run and who will have access to it. And while I'm spilling the beans, the other truth is that creditors don't want consumers in a binding debt repayment plan. No, they'd rather have debtors linger in debt management plans where the creditor can change the repayment terms, at will, however they see fit.

Creditors bemoan that IVA rates are up and they think that it represents an abuse of the IVA. Actually, what it represents is an abuse by lenders for passing out easy credit with nearly no regard for the consumers ability to repay it.

This has become a situation where creditors passed out all sorts of credit to get you to the party and then they will get to decide who gets to leave it and under what terms. There is no other way to see this situation as just not fair to consumers.

Well today, it's not just Insolvency Practitioners that are disturbed by the sudden tack in the course that was headed to implementing the SIVA for consumers to use. No, apparently the Insolvency Service sunk that boat.

If an Insolvency Practitioner is not angry about this then they have become jaded and worn down by a system that places all sorts of responsibilities, licensing and liability of the shoulders of the Insolvency Practitioner but give the IP few good or new tools to true assist debtors to repay what they can afford in a fair, reasonable and sustainable fashion.

The SIVA was a long awaited update to the IVA since it cut out a lot of the senseless administrative crap and lowered the enforcement of the binding agreement between creditors and debtors to 51 per cent of voting creditors by value instead of the current 75 per cent required now.
David Kerr, chief executive of the Insolvency Practitioners Association (IPA), said his members were very disappointed at the Government’s change of heart. He said: “The SIVA scheme would have made it more difficult for creditors to defeat reasonable proposals for repayment by setting arbitrary minimum levels of return which take no account of debtors’ circumstances and ability to pay.

“Certain crditors are still insisting on receiving more than debtors can afford to pay in some cases, resulting in proposals being rejected even where the creditor represents only 25 per cent of the debts. That can be in nobody’s interest.” - Times

Kerr is right. Someone buy that man a drink. By the government dropping its enthusiasm for this needed debt solution, it only makes it more difficult for good people with bad debt to repay what they can afford and avoid bankruptcy.

I'm not sure how they did it but creditors managed to pull off a coup with this overthrow of the SIVA.  The winners are the creditors and the clear losers are consumers in debt and Insolvency Practitioners, that want to help.