Tuesday 31 July 2012

What is an IVA?



An Individual Voluntary Arrangement “IVA” is a formal arrangement governed by The Insolvency Act and Rules which allows an individual to offer a payment plan to their creditors.
The payment plan is usually over 5 years. The reason it is 5 years is that creditors believe that most individuals will agree to take a loan over 5 years and as such they consider a 5 year term as reasonable.
The average debt level for IVA’s is around £30,000 but it is possible to do IVA’s with debt levels as low as £10,000 to £12,000 although the decision to enter into a formal payment plan over 5 years to clear this low level of debt certainly needs careful consideration.


The reason for this is that it may be possible to clear the debt sooner anyway and also debt management plans can sometimes provide a better alternative – they can help reduce debt payments whilst the individual is struggling and debt payments can then increase as finances recover. It is also possible to settle the debt at a discount, once an individual has been on a plan for a period, via a Full and Final Settlement.
An IVA really becomes an extremely helpful rescue tool when an individual has a serious level of debts that they simply cannot afford to repay over a five year period. For example, a debt management plan with contributions of £200 would take in excess of 25 years to clear but 5/6 years in an IVA


There is a protocol which governs particularly what level of investigation insolvency practitioners should undertake before firstly recommending an IVA plus the work that they need to do whilst drafting the IVA proposals.
The protocol was negotiated during 2008 by working parties made up of insolvency professionals, creditors, debt charities and was headed up by The Insolvency Service. The protocol also considered issues such as how an IVA deals with equity in a residential property.


Bearing in mind that an IVA does cover what happens to an individual’s assets and property, the most important stage of an IVA is the consultation by the Insolvency practitioner. Again protocol covers the extent to which an individual must be counselled. It is so important to understand the various stages of IVA and how it will work over the 5 year period or if shorter, the term of the IVA.


The proposals must include details of all assets and this includes funds that could possibly be raised out of pension schemes (only relevant if of pensionable age). Normal household items are excluded as are(reasonably priced) cars and life policies.  It is possible to exclude assets but instead offer a 3rd party sum.
Creditors will normally expect investment properties to be sold with the net proceeds paid into the IVA or alternatively for sums in lieu of the equity in investment properties being introduced into the IVA.


The IVA procedure really does lend itself to self employed individuals who may end up with a combination of debts including business debt, arrears of PAYE/NIC, self assessment tax, credit card debts and loans, personal guarantees, etc.
It is also possible to get agreement to a full and final settlement IVA. Instead of offering contributions over 5 years, a 3rd party sum of money is offered instead. These type of IVA’s generally are appropriate if you can demonstrate that you have little or no surplus income but a friend or family is able and prepared to offer a lump sum into the IVA to settle your debts. For more information please visit Full and Final IVA.


All debt solutions should be very carefully considered. If it’s appropriate for us to charge fees we detail this in our consultations with clients. For further information on fees, please see the FAQ section of the different solutions available. Our IVA experts -  The Debt Advisor complies with the Consumer Credit Act and always offers a cooling off period of 7 days. The Debt Advisor and The Business Debt Advisor are regulated by both DEMSA (Debt Managers Standards Association) and DRF (Debt Resolution Forum). This means they adhere to their codes of conduct.

Friday 20 July 2012


Do your business customers think you are a bank?

Does the following sound familiar?

You run a small business, a successful and expanding business. Unfortunately some of your customers tend to think of you as more of a bank and don’t always pay their invoices as quickly as they should – most likely because their banks were cutting their working capital and overdraft. This caused problems. You didn’t want to upset your customers by putting too much pressure on them, but providing them with credit was upsetting your bank which, in line with what is happening in the market, asked you to reduce the balance on your overdraft!

We can agree that this is a bit of a nonsense scenario, but unfortunately one that is happening all the time throughout the country. Here you have a successful business which is expanding despite the recessionary climate and which needs intelligent support and a structure which enables them to work with their clients so that they can continue to expand their business!

Fortunately the client contacted us and we were able to arrange an attractive and intelligent solution via our commercial funding partners. Whilst we focus on arranging the right finance for your Business, you can focus on operating and developing their business.

Your Bank Manager may have disappeared, but we are still here. Whatever your commercial finance needs – to acquire a business, to expand a business, or to re-structure existing arrangements - speak to us in the first instance – there is no obligation whatsoever on your part.


Tuesday 17 July 2012

Interest free Credit for customers of small businesses


We are pleased to be working with the UK's fastest growing provider of point of sale consumer finance. If your business meets the following criteria then we may be able to help you set up to offer interest free credit and other retail finance products to your customers.

Annual Business turnover:  >£100,000
Net Worth:              Positive
Established:           >12 months
Require a Consumer Credit Licence
Products financed


    • Furniture and interiors
    • Jewellery and watches
    • Health and fitness
    • Consumer electronics
    • Home appliances
    • Automotive and marine
    • Garden and DIY
    • Kitchens and bathroom


Retailers have a great opportunity to to grow their sales by offering credit (including interest free credit) online and in-store.

Here are the key benefits that are on offer to you and your customers:

•           increase sales by up to 40% and average order values by much more
•           A unique paperless e-signature credit application process that makes it quick and easy to process finance orders
•           true multi-channel solution that enables you to offer credit in-store, online and by email via one modern platform
•           daily settlement by BACS 
•           real time sales reporting and account management
•           high acceptance ratio and competitive rates, with a wide range of finance options from 6 to 48 months 
•           high quality point of sale marketing materials and staff training

From customer feedback data we know that 93% of finance orders are incremental (e.g. the customer would not have purchased, spend less, bought elsewhere and/or postponed their purchase if finance was not available).

In summary, introducing a retail credit payment option will attract more customers and increase average spend. We have extensive experience in the retail finance and consumer lending industry. We understand what you want and will give you an honest appraisal of what your options are.


Monday 16 July 2012

Secured lending growth continues

There is an ever growing range of secured loan products geared towards those prime customers. The current market leader in terms of rates is Shawbrook Bank who have recently reduced their  Platinum rate, Nemo has also dropped its headline rates to the lowest figure since pre-credit crunch days to sit just behind Shawbrook at 7.008 per cent. For the first time in many years there is healthy competition in 'prime' secured loans and everyone is benefitting.

Due to the maintenance of the base rate at just 0.5 per cent many people have enjoyed a low variable rate on their mortgage for many months now. However in many cases if they apply for  additional funds to improve their property or consolidate expensive unsecured debt they may lose this privilege. Our panel of prime secured loan providers are now offering their clients the option to stay on their low base rate and borrow extra funds through a second charge at a very competitive rate.

Something else the likes of Shawbrook’s Platinum scheme brings to the table - flexibility, something not often displayed by mortgage lenders with regard to credit history. Clients with even the most minor blip are declined by the high street, even if their debts are settled. However, Shawbrook’s approach on its lowest rates is different.

They will accept customers with minor adverse. So if a customer has a missed payment on items of unsecured credit as long as it was brought back up to date quickly then this is fine. They will also ignore CCJs and defaults over three years old unless over  £5,000 – in which case they will ask for the background. 

These plans are not just for small loans. These prime lenders will lend anything from £25,000 to £125,000 at 6.9 per cent. This means that customers can now genuinely choose between a  remortgage or a secured loan.