1980s – Bankruptcy the only Option for businesses & little access to credit
In the 1980s 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 IVAs were entered.
1990s – Credit Boom and the start of the growth for the Consumer IVA
During the 1990s 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 individuals required support when falling in to difficulty in maintaining their payments
2000s – Huge increase in IVA popularity.
During the 2000s 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 IVAs 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 IVAs making it more accessible and cheaper to operate. This reduced the cost significantly of IVAs 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 where people had more than £15,000 of debt and were able to offer over £200 per month. With the introduction of this protocol, this began to change.
IVAs today
Today IVAs 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 propose an IVA with Financial Support Systems if you have unsecured debts of over £6,000 and payments from £100. Repayments are subject to individual circumstances and affordability.
Important Information
Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on successful 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 equity in their property, subject to certain criteria. If unable to release equity and equity is available an additional 12 months payments may be requested in compensation.
Financial Support Systems provides insolvency solutions to individuals, specialising in IVAs. We do not administer or provide advice relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find where the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our Insolvency Practitioners' regulators, the 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.
The Money Advice Service is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here.
The Association of Business Recovery Professional, known as R3, produce a booklet called "Dealing with money worries - A guide to your options". This is a very helpful summary of the various options for dealing with debt and a copy can be found at the following link. Please also see link to 'Voluntary Arrangements - A Guide for Creditors on Insolvency Practitioner Fees'.