1980’s – Bankruptcy the only Option for businesses & little access to credit
In the 1980’s credit as we know it today was not as widely available. Mortgages were the closest thing people got to obtaining credit. It was even difficult for companies to obtain credit to help grow their businesses.
As a result of having little access to credit, when something financially impacting happened like a recession, most companies would usually file for bankruptcy with no other alternatives available. This resulted in loss of jobs for people employed by these companies, a loss of the product or services these business offered and of course the loss of income and ability to continue to be a Director of a limited company for the owners.
1986 – Legislation passed to give Businesses another option
In 1986 legislation was passed and The Insolvency Act 1986 gave way for a solution that allowed business with financial problems the ability to buy time to repay creditors whilst continuing to trade also allowing them to secure employee jobs. this was good for the creditors too as they would receive most if not all of their money back, instead of the very small return they would have received if the company filed for bankruptcy. This alternative to bankruptcy was also available for Individuals but volumes remained low for the first few years as consumer debt was low and the option not very well known and in 1987 just 404 IVA’s were entered.
1990’s – Credit Boom and the start of the growth for the Consumer IVA
During the 1990’s and the start of the new millennium, credit became increasingly more accessible with the significant growth in credit cards and loans. Ultimately this meant that more and more individual’s required support when falling in to difficulty in maintaining their payments
2000’s – Huge increase in IVA popularity
During the 2000’s creditors began to become swamped with IVA proposals and turned to a limited number of accounting firms and institutions to act on their behalf. This began to standardise and simplify the practices for proposing consumer IVA’s to make dealing with such growth more manageable.
2008 – The IVA Protocol was Introduced
In 2008 a code of conduct was agreed between IVA providers and their regulators known as the protocol. This was aimed to standardise the proposal of IVA’s making it more accessible and cheaper to operate. This reduced the cost significantly of IVA’s and made it possible for consumers with lower debts and lower payment offers to gain access to this solution. Previously the majority of IVA providers had only accepted the cases of people who had more than £15,000 of debt and able to offer over £200 per month and with the introduction of this protocol, this began to change.
Today IVA’s continue to be an extremely popular solution for managing debt difficulties, providing people with a sustainable repayment plan and protection from further action by creditors. You can now propose an IVA with Financial Support Systems with debts of over £7,200 and payments from £100. Repayments are subject to individual circumstances and affordability.
Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA. If your IVA fails, it could lead to Bankruptcy, although this is rare and alternatives may be available. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release the equity in their property, if unable to release equity and equity is available creditors may request an additional 12 months payments in compensation.
Financial Support Systems provides insolvency solutions to individuals, specialising in IVA's. We do not administer or provide advice solely relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find were the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our regulators Institute of Chartered Accountants in England and Wales. All advice given on any alternative options is therefore provided in reasonable contemplation of an insolvency appointment.
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