/24-7PressRelease/ - LONDON, UK, February 08, 2008 - The government has introduced a new code for Individual Voluntary Arrangements aimed at making the process more transparent and predictable. It is likely that the number of insolvencies will increase this year amid credit crunch in the financial markets and millions of people finding it difficult to repay their loan instalments.
The IVA protocol that has been agreed with the industry is likely to produce good results on the ground level. Pat McFadden, the government minister responsible for the Insolvency Service, said: "The Insolvency Service has facilitated a process which has successfully produced a voluntary code for IVAs to reflect the changing needs of the market. It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format. Today's protocol is a significant achievement for everyone involved."
The IVAs, that became popular as an alternative to bankruptcy, have grown from around 5,000 in 1998 to more than 44,331 taken out in 2006. The number of IVAs taken in 2007 has reportedly fallen. Consequently, the number of firms in the market offering to arrange IVAs has also increased.
Many experts have expressed concern about the aggressive way in which IVAs are being marketed and about the scale of the fees that it generates. The new protocol is an important step in checking mis-selling of these plans. Debt management services, as being offered by various debt management firms, involve IVAs, debt consolidation loans, etc.
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