Financial Industry Concerned over IVAs
The Office of Fair Trading criticised 17 firms for misleading advertising that did not spell out the full implications of IVAs, in a statement last week.There is concern that some firms are cohering sales people to promote IVAs to indebted adults so they can earn commissions that averages £6,500.
The Insolvency Practices Council (IPC) has reported on rogue practitioners who sell IVAs to benefits claimants. These people rarely have any chance of meeting the required payments. They will loose the IVA fee, and stack-up several hundreds of pounds in fees, before being forced into an inevitable bankruptcy.
Mervyn King, the Bank of England Governor, warns that the £1,200 billion debt mountain is a social problem. Until now, many people are holding the belief that the debt is a personal problem, or limited to the lower-income sections of society.
This comes on the heels of reports that indicate the number of women bankrupts.
The accountancy firm Wilkins Kennedy, claims that the proportion of female bankrupts has risen from 32 per cent in 2000 to the current 44 per cent, and is expected to reach 50 per cent in 2009.
The firm has two classifications of women who claim bankruptcy. Those who are overspending to sustain a lifestyle they cannot not afford, and those who suffer as single mothers or divorcees.
The CCCS reports that nearly half the people they recommend bankruptcy as a solution to their debt problems are single women. The average debt of this group is £30,293. Half of the CCCS clients blame the unexpected and emergencies for their debt problems. The most common problems are a relationship breakdown, illness and employment.