Surge in IVAs 'huge problem' for industry

Following an insolvency practitioners’ conference hosted by KPMG in February,
it has emerged that those working in the industry are struggling to cope with
the increase in bankrupt individuals seeking individual voluntary arrangements,
including increased costs of paper and postage.

In 2005, IVAs rose by 117%.

Steve Treharne, head of personal insolvency at KPMG, said the dramatic rise
had led to a ‘huge volume of paper work’.

‘This causes major problems for creditors in the processing of IVAs. The same
proposal quite often can be sent out as many as 6 times to creditors who may
have customers with multiple accounts and the insolvency practitioner firms have
to pay for the paper, post and packaging, increasing unnecessary costs.

‘Such duplication seems wholly unnecessary and ways to streamline the process
need to be found. However this relies on the understanding from both the lenders
and insolvency practitioners on how this process can be best managed.’

At the forum, 125 delegates from the finance industry and insolvency firms
listed the volume of correspondence, the desire for a standard format for
proposals and confirmation that an IVA is the most appropriate route for a
debtor in financial difficulties as their top three concerns.

A working party including representatives from creditor organisations and
Insolvency Practitioner firms who specialise in producing IVAs has been tasked
with taking forward the action points identified.

An IVA enables an individual in financial distress to approach their
creditors with a plan to restructure their debts.