This story ran on this Thisismoney.co.uk this week and took many by suprise. It further indicates that lenders are clamping down on IVA’s and the results of the summit on the 31st May will be very interesting

Lenders to slash IVA firm fees

Banks and other lenders are to halve the fees they will pay to firms providing individual voluntary arrangements for people unable to pay their debts.

The move will stun many in the industry and could prove a body blow for some IVA providers, which have grown rich on the back of heavy consumer debt.

It is thought creditors will cap the fee on an IVA - which can currently net a provider £8,000 or more upfront - at £4,500 and payments would be made in stages.

IVAs are an alternative to bankruptcy, where the borrower agrees to repay a proportion of the debt and the lender writes off the rest.

The new conditions - which do not amount to price fixing - are expected to be unveiled at a summit meeting in London on May 31 at which banks and other lenders will sit alongside IVA providers.

IVA fees have always been an issue featured in the press and when lenders and IVA providers come head to head at the summit meeting, it will be interesting to see the outcome. Although IVA providers have been criticised for excessive fees, they do still provide a service as does any other business so negotiations may prove tricky.

One of the most talked about news items in the forum this week, was the statment by the Debt Advice Bureau that

Consumers themselves are ultimately responsible for recent rises in bankruptcy and IVA numbers

The report when on to quote:

Stephen Rose, the director of the Debt Advice Bureau, explained that it was always consumers themselves who made the decision to spend money and get themselves into ever increasing cycles of debt.

He said that “things like interest rate rises that we’ve had aren’t in themselves a reason for why there’s been such a rise in insolvencies.

“Rates would have to go a lot higher before that would filter through and be such a cause.”

This is quite relevent as Interest Rates HAVE in fact gone up this week and consumers are being hit hard. It will be interesting to see if the interest rate rise will lead a rise in insolvencies this coming quarter or as Mr Rose states “arent in themselves a reason” for insolvenciees to rise.