Responding to claims from Northern Rock that their recent surge in bad debts is a consequence of debtors being put into unsuitable IVAs, Nick O’Reilly, Vice President of R3- The Association of Business Recovery Professionals- said:

‘I find it staggering that Northern Rock are seeking to lay the blame for their poor lending decisions at the door of IVA providers. Insolvency Practitioners don’t lend the money and they don’t spend it. They offer a solution to help people sort out their debt problems.

Insolvency Practitioners who oversee IVAs are highly regulated professionals who do not, as a matter or course, recommend solutions to debtors which would be unsuitable. I will be writing to Northern Rock asking for evidence of their claims that 9 out of 10 people have been recommended IVAs that are not in their interests’

An IVA (Individual Voluntary Agreement) is a statutory measure which allows debtors to put a proposal to their creditors for final satisfaction of their debts. IVAs require creditors to freeze the interest on debt, stop harassment from creditors and their agents and unusually mean that debtors can keep their homes.

Nick continued:

“What is most worrying, from R3’s perspective, is that blanket refusals of IVAs will mean that more people are forced into bankruptcy- and that means the loss of the family home for debtors or debt management plans which don’t freeze interest and can last for years longer than an IVA. Forcing debtors to choose between a roof over their head or a lifetime of slaving to pay back debt is deeply unfair”

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