At times the IVA might be wrongly sold to and that happens when you are not made aware of all the terms and conditions of the agreement. 

Today I am going to cover important points on how you can decide whether the IVA has been wrongly sold to you or not. What to do when an IVA has been mis-sold to you and much more. 

Let’s get right into it.

What is an IVA?

Individual Voluntary Arrangement is a debt management plan with legal importance and binding. It is signed between three parties usually, yourself, your creditors, and your Insolvency practitioners. 

The contract is usually placed in order to keep you away from bankruptcy when you are unable to pay your debt back.

The insolvency service provider works as a middleman to manage your finances and debt in order to pay back your creditors while charging a fee

What Does a Mis-sold IVA Mean?

At times the Individual Voluntary arrangement might be wrongly sold to you, it means that you might not be told about every clause and there are certain chances of backhand dealings or fraud. 

This refers to a company that mis-sold an IVA to you. 

If you have agreed to an IVA but the terms and conditions and circumstances were not clearly put out in front of you and after the agreement, if you had been wrongly charged or applied certain terms, that means you have been mis-sold an IVA.

Can an IVA Go Wrong?

Yes, there are many circumstances when an IVA may go completely wrong and off track. This might be due to poor debt solution and debt management by your insolvency practitioner. 

Or it might be due to shady dealing by IVA firms which have not been regulated by the insolvency practitioners association. 

How to Know if Your IVA has Gone Wrong

Many factors play an important factor in an IVA, however, to detect why or how your IVA has gone wrong you must keep some important points in mind:-

Debt and Cash Payments does not match

If your payments to the creditors are greater than the reduction in your debt (excluding miscellaneous expenses) that means the money is not wholly being used to pay off your debt.

This might be an indicator for a wrongly traded IVA, however, it does not always mean that an IVA has been sold wrongly. 

Excessive Extra Payments

If your insolvency practitioner has been asking for extra payments, which might not have been a part of the initial agreement, it also indicates a derailing of an IVA.

Usually, the IVA comes with all the payment details, such as the monthly payments and aggregate annual payments, etc. 

Differentiation Between Good and Bad Advice

There are no set criteria for good debt management advice or a bad one, different circumstances demand a piece of different advice that will fit in at that specific time. 

I have listed some key points which might be a general criterion for weighing advice.

Good AdviceBad Advice
Based on legal followingsAt times not by the law
Long term plan approachFocuses on Short term gain 
Pros and Cons both are put in front of youOnly Pros are being listed in front of you
credit card  iva and ppi  mis-sold iva

Who is liable if Your IVA has been Mis-sold?

If you feel like your Individual Voluntary Arrangement has been wrongly imposed upon you by your agency or if you are facing a failed IVA due to your IP, you might be able to pass a claim on them.

What Can You Do Next?

There are several options to go by, first of all, you can file a claim against your IP or the company who mis-sold an IVA to you. You can demand all procedural fee backs, the debt advice, and management fee back as well. 

Secondly, you can even ask for compensation, the financial damages that you have to incur due to bad management and misselling, you might be able to get compensated for that if you opt for a legal procedure. 

FAQs

Can I Get a Compensation for Mis-sold IVA?

That will depend on the legal procedure and the verdict of the court. However, it is also possible that you might get to negotiate with the firm who traded the IVA to you and get compensation directly from them.

In my personal experience, if you have a strong case, it won’t be hard to get compensation in court as well.

Should I change my IVA firm or IP after a Mis-sold IVA?

Yes! If you deem your IP or firm responsible for this mismanagement then you should change your IP and firm. There might be some extra costs involved in changing your IP but these costs are worth paying for a secured financial future.

Does my IVA end if I change my IVA Firm?

No! Your IVA remains intact with your creditors if you change your IVA firm.  The agreement may go on as it is, or your IP might be able to negotiate better terms with your creditors and alter the agreement.

Apart from that, you don’t have to worry about your agreement being ended.

Where Can I Get Good IVA advice?

Many good advisors can give out good debt solutions. You might be able to get good advice from a professionally qualified debt manager, qualified ACCA, or different debt management companies.

When is an IVA considered failed?

It might fail when one of the parties has terminated it or breached the terms, apart from that if you are unable to pay back your creditors, the agreement might be considered a failure.

There are many cases when an IVA failed at final review as well. The most common reason for that is poor debt management.

Final Thoughts

Individual voluntary agreement has provided many people a safe escape from bankruptcy, however, it does not mean that it is viable for everyone.

Since the emergency of this agreement, it was widely used but as it has been spread throughout, the mis-selling and frauds have increased. 

Please remember to opt for a company that is regulated and authorised by the financial conduct authorities and always follow the proper legal procedure when drawing up an agreement. 

This will help you stay safe from financial crises. 

You can always refer to my website for more debt advice. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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