Published in Debt Advice Features on Saturday, December 30 2006

Believe it or not there are very few regulations when it comes to an Individual Voluntary Arrangement being advised to people. This solution should be used for people who are insolvent, that is that they have more money going out than coming in, and can’t possibly repay their debts over a reasonable period of time, but can afford to pay a little back each month. If you cannot afford to keep up payments into the solution then Bankruptcy would be favourable or perhaps a more informal solution. The problem is companies are are getting paid for putting people forward for an Individual Voluntary Arrangement. This alone is fine, but it is believed that people are being pushed for Individual Voluntary Arrangements when perhaps a different solution would be more favourable for the client and the creditors.

As with any booming market there are always going to be “cowboys”, but how can such firms be avoided?

Do your homework - research the company, are they regulated by the Office of Fair Trading? Check if they are licenced credit counsellors, although there isn’t a lot of regulations for such companies either, if they offer a range of solutions, they are less likely to pigeon hole you into the only solution they “sell”. Check the Internet for any bad press regarding the company. A simple search in a search engine for “problems with .....” may turn up all sorts.... I don’t want to bad mouth any particular companies, but there are several well known companies who seem to crop up when bad advice has been given, so a bit of research is always advised. Similarly check with the Citizens Advice Bureau or Consumer Credit Counselling Service before entering an agreement. These organisation can give you impartial advice regarding your finances.

The government hasn’t got any specific plans to introduce further regulations, but there are steps being taken to introduce some specific licences and a representative function for providers of Individual Voluntary Arrangements.