What to look for and what to avoid in an IVA company

If you’ve decided that an individual voluntary arrangement (IVA) is the best way to deal with your debt, you’ll need an insolvency practitioner to set it up and manage it for you. But how do you know which IVA companies you can trust? Find out what to look for and, crucially, what to avoid in an IVA company.

Person weighing up their financial options

Before approaching an IVA company

Before deciding that an IVA is the best way to deal with your debts, it’s important to consider all your options. IVAs are just one of a variety of debt solutions available, so make sure you get free, impartial advice to check which are suitable for you.

Red flags to watch out for when comparing IVA companies

An IVA is a great product in the right circumstances and can help people take control of their money and get back on track with their finances. But there are companies out there that sometimes recommend an IVA when it’s not a suitable option and this could leave you in a worse financial position than when you started.

For example, they may agree unrealistic monthly payments with creditors that you will struggle to make. This is why it’s important to do your research before choosing an IVA company.

Here are some red flags to look out for:

Person looking through a magnifying glass

Unrealistic claims

Don’t trust a company making unrealistic claims, such as guaranteed acceptance, a 0% failure rate or your debt being completely written off.

No one can guarantee that creditors will accept an IVA proposal. A reputable company would only submit a proposal they strongly believed would be accepted but it’s down to the creditors involved to decide whether they’re happy with the payment offer.

Boasting a 0% failure rate is also a suspicious claim. It may be rare but, from time to time, people’s circumstances change meaning they can no longer make their payments or they break the terms of their IVA and it fails.

Not all of your debt is written off with an IVA, so this is a deliberate attempt to mislead. Companies making this claim should be avoided at all costs.

Other options aren’t mentioned

An IVA isn’t the only debt solution – and it definitely isn’t a one-size-fits-all option.

A company should assess the financial information you’ve given them before advising which debt solutions, if any, are suitable for your situation.

Companies have a professional and ethical duty to talk about all the solutions available so you can make an informed choice.

You feel pressured

Entering an IVA is a big decision and companies shouldn’t rush you into deciding.

Don’t let companies push you into a solution that may not be right for you.

If they try to give you a deadline or an ultimatum, you should look elsewhere.

Unnecessary fees

The advice you get when you’re looking into the best way to deal with your debts and finding out about debt solutions, including IVAs, should be free.

If a company tries to charge an upfront fee, avoid them.

Although all insolvency practitioners charge for the work they do, choose a company that includes these fees in your IVA payments.

If you’re making monthly payments towards an IVA, these should be based on what you can afford after covering your essential expenses. Be wary of companies that suggest payments you would struggle to make. They might be doing this to increase their own profits.

High failure rates

You’re allowed to ask about an IVA company’s failure rate - bear in mind that not every IVA will be successful. Sometimes a person’s circumstances will change during an IVA or they might break the terms and it will fail.

Having said this, a high failure rate should ring alarm bells. Companies should only be recommending an IVA when they’re in the customer’s best interests and are likely to succeed should nothing unexpected or beyond their control occur.

Bad reviews

When in doubt, check a company’s reviews.

Independent review platforms like Feefo and Trustpilot are a great indication of whether a company can be trusted.

Green flags when choosing an IVA company

Now you know what to avoid, what about the green flags that suggest an IVA company is trustworthy?

Regular contact

Any IVA company should keep you up to date throughout the process, so you always know what’s happening and what to expect.

Accessible information

It’s a good sign if an IVA company’s website is informative and easy to use.

A company shouldn’t want to arrange a home visit or ask you to go to their office unless this is something you’ve requested.

They’re licenced

Debt management companies must be authorised by the Financial Conduct Authority (FCA) and follow their rules and guidance about debt advice, which should be appropriate for you and your financial circumstances.

IVAs need to be managed by an authorised insolvency practitioner, who can either work independently, or as part of a debt management company. Insolvency practitioners are licensed and regulated by the Insolvency Practitioners Association. You can check an insolvency practitioner is licensed on the Insolvency Service website.

A comprehensive privacy policy

An IVA company should be happy to provide you with their privacy policy. In fact, you’ll usually be able to find it on the company’s website. The policy should explain if, and under what circumstances, any of your details will be shared with other companies. This is a legal requirement under the General Data Protection Regulation guidelines.

If you need help with your debts, we’ll be happy to offer free advice on all the available solutions and let you know which, if any, are suitable for you. Try our online solutions finder or give us a call.