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The Guardian has published an interesting piece on IVA failure which will certainly give policy makers pause for thought. The article is entitled, "Insolvency is the price of falling behind with IVA payments." The problem of IVA failure has been looked at in depth by Susan Morgan in a recent research report on IVA failure. The work is entitled: "Causes of Early Failures in Individual Voluntary Arrangements" It throws much light on this problematic area. The Guardian piece notes that:
"As many as one in five debt repayment plans are falling by the wayside, leaving thousands of Britons in danger of going bankrupt.
Many individuals who have taken out an individual voluntary arrangement (IVA) to reduce their debt have been unable to stick to the repayments and now have a lapsed plan that threatens to tip their finances over the edge.
If the IVA fails, the money spent on setting up the plan – which can be as much as £2,000 – then goes to the insolvency practitioner to meet their costs, leaving the borrower saddled with the original debt.
Malcolm Hurlston, chairman of the debt charity Consumer Credit Counselling Service (CCCS), says: "When IVAs fail, they impart a significant financial and human cost on the consumer, who will end up making payments to the IVA provider without getting relief from their debts."
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...