Payplan calls for new form of IVAs

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Payplan, the free debt management company, is calling for a new type of more flexible Individual Voluntary Arrangement (IVA) that will help optimise creditors’ returns.

Payplan believes that IVAs are currently overcomplicated and too expensive. It proposes a slimmed down version that is not only more flexible, but also far less expensive. The new proposals would be made to creditors on a ‘take it or leave it’ basis and do away with expensive creditor modifications of terms that often significantly add to costs.

Payplan provides clients with debt management plans at a fraction of the cost of IVAs. This is despite the fact that debt management plans are harder to administer owing to the fact they are not binding on creditors.

Recent Insolvency Service research supports Payplan’s view, saying that although IVAs should become “the fulcrum of the personal insolvency regime” they are presently “little known, over-complicated and over-priced”.

Next year, the Insolvency Service will itself be promoting a cut down “take it or leave it” post-bankruptcy IVA product arising out of changes to insolvency legislation resulting from the Enterprise Act*. Payplan believes that to extend this model to all IVAs would be straightforward requiring only secondary legislation.

John Fairhurst, Managing Director of Payplan commented:

“The measures we are proposing would provide a clear and properly regulated solution for people in debt that would provide them with a robust mechanism for debt repayment.

Reducing costs and improving access will ensure that returns to creditors are optimised”.

For further information on Payplan’s debt management service, creditors can call 01476 539200

* Personal insolvency provisions of the Enterprise Act come into force early next year. They will allow the Official Receiver to put a bankrupt’s proposals to creditors and act as supervisor in post-bankruptcy IVAs. The Official Receiver will act as nominee for a flat fee and the supervisor’s fee will be a percentage of realisations. Such cases will be subject to a “fast-track” regime where creditors will be offered a proposal, but unable to modify it. There will be no creditors’ meeting, and they will either accept or reject the proposal by correspondence.

It is hoped that by allowing the Official Receiver to act in straightforward post-bankruptcy cases the number of such IVAs will increase. The Official Receiver already has considerable experience of operating IPOs and will have most, if not all, of the information needed to draw up a simple IVA proposal. The proposals will not stop debtors from entering into normal IVAs with an insolvency practitioner as nominee and supervisor.

For further information on the Enterprise Act, please visit http://www.insolvency.gov.uk