It has been many months since the IVA Council first surfaced, with numerous reports of debtors receiving these letters, claiming that they had been the victim of IVA mis-selling. Now, recent posts on the forum indicate that they are still active and still sending out similar letters in mass mailouts.

The organisation has become something of a bogeyman on the forum, assumed to be scam artists. This may be an unfair assumption to make. It may well be that the organisation has genuine grievances with the IVA industry and that they are committed to improving it. There is certainly a case to be heard for removing the stigma from bankruptcy, and the sometimes poor level of service and advice dispensed by some IVA providers should be reported and stopped.

The methods used thus far by the IVA Council, however, are highly irresponsible. Mass mailouts to inform people are one thing, but letters which advise people to stop paying into their IVAs without informing their Insolvency Practitioners are quite another. Despite repeated assurances that they intend to cease sending out their letters, the forum is still inundated with people asking about the IVA Council after receiving one of them. Worse, the tactic seems to be working. Many of those who post on here report that they were almost taken in until they read some of the forum threads at IVA.co.uk. There is no telling how many people without access to the forum have followed the instructions of these letters to potentially disastrous consequences.

The case of the IVA Council shows how unregulated certain parts of the debt industry are. Multiple complaints have been made by IPs and debtors, but as the company is not regulated by the FSA, there is little they can do. Complaints have apparently been passed on to Trading Standards, and everyone on the forum eagerly awaits the outcome of any investigation that results from this. Certain parts of the debt management industry (including, incidentally, the IVA providers that the IVA Council criticises so strongly) are closely monitored by numerous organisations, but those that operate in legal grey areas escape action. It is these companies that are most often exploiting debtors for their own gain, and it is they who deserve the strongest legal action.

Anyone receiving a letter from the IVA Council should contact their Insolvency Practitioner and discuss the matter with them directly. If a debtor does intend to go bankrupt, they are strongly advised to go through the process themselves, and certainly not pay for unnecessary assistance.

Since Debtmatters sold on its entire book of IVAs, thousands of debtors have been transferred to new companies, new Insolvency Practitioners, and new problems. With 4,500 cases going to Grant Thornton and a similar amount being picked up by Payplan, confusion was inevitable. The fact that every single one of these cases will now undergo a variation meeting with creditors has plenty of debtors nervous.

The closure of the Debtmatters IVA branch was perhaps inevitable, as they were the most high profile stock market casualty from the IVA industry last year. They may have been the first big company to give up on the IVA market, but they won’t be the last – Accuma are reportedly the next who will sell on their IVAs after taking a battering on their share prices.

Forum members have reported varying experiences during the change. There have been a few absurd cases, perhaps inevitable in such a large switch of cases. One forum poster, who was in a joint IVA with his wife which was being run by Debtmatters, was informed that his IVA would be transferred to Grant Thornton whilst his wife’s would go to Payplan. Fortunately, the situation seems to have been solved without too much difficulty. For other debtors, the change has come at the worst of times. One forum member has been urgently seeking a full and final IVA offer to prevent a default on his IVA, and is struggling to have his proposal considered during the chaos of the changeover. For most, it has simply been a cause of confusion and anxiety.

Despite the inevitable alarm caused by a variation meeting, most debtors need not worry. The meetings seem mostly to make sure that the IVAs are in line with Grant Thornton and Payplan’s way of running IVAs. If anything, IVA contributions are likely to go down, as a consequence of the higher cost of living.

The next few weeks and months will show how smoothly this changeover proceeds. Accuma and Debtmatters were often, rightly or wrongly, accused of being IVA factories, processing a very large number of cases with little in the way of personalised service. Now that the industry has tightened up, the larger operators are finding it more difficult to remain in profit – smaller companies offering a higher quality of service may soon become the norm. The change may ultimately be for the best for many debtors.

Thousands of over 50 and retired UK residents could face money trouble in the near future, as new research shows they are the age group with the fastest growing debt in the UK. A survey from Help the Aged and Barclays shows that levels of debt are growing rapidly amongst the over 50s, with this group borrowing four times as much as they did ten years before.

It is one thing to run up debt in your twenties and thirties, work through your problems for several years, and come out the other side debt free with most of your working life still ahead of you. It is quite another to have debts hanging over you during your retirement – if there is any point in a persons life when they should not have to deal with a serious debt problem, it is when they have retired after working for many years. The research studies debt, not insolvency – it may well be that despite this surge in debt they may be handling it much more sensibly than their younger counterparts. But a rapid increase in debt is always dangerous, particularly in those who are on the verge of retirement, since their capacity to earn their way out of trouble is much more limited.

Recent reports from the housing market indicate that retired people who have remortgaged are in particular danger of falling into serious debt. Many pensioners have taken advantaged of house price rises in recent years, remortgaging to free up money for their retirement. Indeed, for many, the value of their house is their main source of retirement funds. Managing debt on a fixed income like a pension is difficult, and can leave the debtor very vulnerable to a sudden change in circumstance – the current turbulence in the markets and unstable house prices certainly qualify.

The forums have recently have seen the moving case of ladyc, a retired woman who has been facing a Debt Management Plan that will take 35 years to pay her debts in full. She was even considering pawning her engagement ring to pay off some of her debts. Luckily, the forum experts dissuaded her from this drastic action, and are hoping to find a debt solution that will clear her debts much faster than this. It is to be hoped that she, and many others like her, can find a workable solution to their problems, and not be faced with a debt crisis in their retirement years.

Thousands of struggling debtors could be at risk of losing their homes, with many banks use of charging orders surging in an attempt to offset losses due to bad debt. In between 2000 and 2006, the latest year that full statistics from the Courts Service are available, the use of charging orders to secure unsecured debts to a property increased by a shocking 560%. This increase was well before the credit crunch hit, and early reports indicate that it is accelerating in the wake of the current financial turmoil.

IVA forum members are all too familiar with the aggressive use of charging orders. Before its collapse and nationalisation, Northern Rock was infamous for its eagerness to use charging orders, particularly in cases where a debtor had an outstanding mortgage and an unsecured loan with Northern Rock. Their preferred tactic when faced with an IVA application was to vote against the proposal, then ‘bolt on’ the unsecured loan to the mortgage with a charging order. Now it seems that many debtors are looking to follow Northern Rock’s example

Northern Rock’s tactics highlight the temptation that charging orders hold for creditors and the danger they pose to debtors. From a financial point of view, if a bank can secure a loan to a property and reclaim the majority or entirety of the debt through the value of that property, it is better for them than if they have to write off a proportion of debt through an IVA. The problem is that it leaves other creditors out in the cold. One creditor is paid back in full, while the others face a greater write off of debt. This is the dangerous precedent that could be set. Rather than working together to try and solve a debt problem co-operatively through negotiation and fair treatment of a debtor, it encourages creditors to scramble in order to be the first to secure a charging order and protect their own interests. In a time when banks are desperate to avoid losses through bad debt, the increased use of charging orders is all too tempting, and could spell further trouble for home-owning debtors.

The long Easter weekend traditionally provides everyone with a chance to spend some time with the families, but this year, plenty of people will need the break to take a long, hard look at their finances. Debt has become a serious national problem this year, and with the credit crunch and housing crisis well underway, there are no quick fixes. Personal debt continues to rise, and each day seems to bring new statistics about the trouble that UK residents face. It isn’t a matter of remortgaging or borrowing your way out of trouble, the two most common solutions that people used when the economy was on the up. Careful money management and sensible cutbacks are the best tools for the job now, with people having to plan for the long haul if they want to trim their debts.

The IVA industry has troubles of its own, just when it is about to be needed most. In the wake of increased creditor hostility to IVAs, acceptance rates are falling. Many IVA companies are struggling to survive, with Debtmatters selling on the IVAs that it was running and transforming into a secured loan company. A new protocol has come into effect between creditors and IPs, but it is still too soon to say how effective it will be – hopefully, people will once again have reliable access to the debt solutions that they need.

What is certain is that the IVA forum continues to provide a safe haven for troubled debtors around the country. Melanie Giles recently made her 10,000th post on the site, a remarkable achievement, and she is just one of many who provide expert advice to those in need. But just as important as the advice provided is the sense of community – the weight watchers club and the pets corner that have both sprung up and clear examples that the forum is for more than answering debt queries. Being in debt can be a very lonely experience. Most people are reluctant to share their troubles with those around them, and cutting back on costs limits the options for socialising. The IVA forum provides a place where people can advise, support, and socialise with those who are experiencing the shame troubles, and those who have found a way out of their difficulties. Hopefully, this Easter weekend will see a few more worried debtors plucking up the courage and making their first post on the forum.

Every household in the country could be under threat from the rocketing cost of living, research from the Consumer Credit Counselling Service has shown. The rising costs are not just affecting those who are already heavily indebted. Even relatively high earners who have previously had no debt problems are being caught out this year. Utility prices have shot up, some by 20% or more – the average household fuel bill is now over £1000 a year. Food prices are rising far above the rate of inflation. Above all, as house prices fluctuate, mortgage interest and repayments are becoming increasingly difficult to afford. Many people are being squeezed between their suddenly increased mortgage payments and the ordinary bills that are starting to pile up.

For this reason, homeowners of all ages and professions are particularly in danger. Pensioners who have released equity from their houses to fund their retirement face serious problems due to their low income. Perhaps worst hit are recent first time buyers who already have moderate amounts of debt. Locked into their suddenly expensive mortgages, with no equity to bail them out and debt interest already mounting, they will have to take rapid action to avoid disaster.

Those in already in an IVA need to be especially careful – their budgets are already extremely tight, and they cannot take on credit to help them through a tight spot. IVA debtors need to keep an even closer eye on their budget than most as costs start to rise, and be willing to call a variation meeting with their creditors if the price of living rises to unsustainable levels.

In light of the rapidly worsening conditions for the ordinary UK consumer, no one can afford to be complacent. Even those who have previously felt financially comfortable need to take stock and see just how much they will be affected. For homeowners with large amounts left on their mortgage and those who had built up a degree of debt before the credit crunch, the situation is even more pressing; early action could be vital in preventing a personal debt crisis.

Over half of under 35 year olds in the UK are contributing nothing towards a pension, and almost two thirds have no savings at all, recent research reveals. The statistics, from a study by Skipton Building Society, are a worrying indication of how much we have shifted from a culture that saves to one that borrows, and how long lasting the effects of this change are likely to be.

The trouble with cheap credit is the long delay before negative consequences occur. Take out a loan or a new credit card, and that is several thousand pounds that is immediately available to be spent. It is only months or, more likely, years later, when the interest has racked up and it is one of a dozen debts that needs to be paid off, that a debtor will begin to feel the squeeze from that original source of credit. It is easy to forget to think that far ahead, and most creditors do everything they can, from attractive advertising to special introductory offers, to get people to think of the immediate benefit rather than the future consequences.

The reverse is true with savings and, especially, pension funds. People are asked to put away a portion of the monthly income away in order to reap the rewards many years in the future. In a “spend now, pay later” culture, it is easy to see how pensions and savings are becoming increasingly unpopular. Saving for the future is a habit we seem to have forgotten.

In the UK, we are particularly vulnerable; we have the unfortunate combination of one of the highest levels of personal debt combined with its lowest state pension in Europe. Those who do not save now could face poverty in their retirement years. The full effects of this will not be felt for a long time; for those who are struggling under the weight of debt repayments and the higher cost of living, saving for the future is the last thing on their minds. But saving needs to become a priority, even in these troubled times. In the short term it provides protection against unforeseen circumstances, and in the long term it could be the difference between a secure retirement and one that is fraught with financial difficulties.

Those facing bankruptcy may no longer have to fear being named and shamed in their local newspaper, the government announced this week. A new proposal this week suggests that bankruptcy notices in local papers will no longer be mandatory; they will be reviewed on a case by case basis, and will only go in if it is deemed necessary, though bankruptcy notices will continue to be published in the London, Edinburgh and Belfast Gazettes. The new measures are expected to come into force by the end of 2009.

Most people are understandably horrified by the idea of having their bankruptcy advertised for all to see, though the reality is that the notice usually buried in an obscure part of the paper that very few people read. Even so, these public notices play are large part in creating the stigma that bankruptcy has.

What impact this change will have on IVAs and the rest of the debt industry remains to be seen. While predict a surge in bankruptcies, opinion is divided on how much of a factor these public notices really are on the choice between IVA and bankruptcy. Several forum posters have claimed that the notices were one of the most important reasons why they chose an IVA over bankruptcy, while some of the Insolvency Practitioners who post have said they find it is a very minor consideration for the majority of their clients. If bankruptcy becomes a more popular choice in light of the change, perhaps IVAs will be encouraged by creditors. Creditors receive a very poor return from bankruptcies, and will not be pleased if they increase abruptly at the expense of IVAs.

No matter what repercussions it has for the rest of the debt industry, it is a welcome change. In the world of electronic records, the local bankruptcy notices seem like something of an anachronism, a relic of a time when the local newspapers were the most effective way of informing a community that an individual or a business had gone bankrupt. If the purpose of the notice is to inform creditors and local tradesmen of a person’s insolvency, credit records and the insolvency register are a far more effective way of doing this. If it is in some way an indirect attempt to stigmatise and shame those who file for bankruptcy, it is high time that the notices were done away with.

The Government is expected to increase public borrowing by 33% in the budget release this week. This increase is in anticipation of the expected downturn in the economy, and is a sad sign of the national approach to the debt problem.

As individuals and as a nation, we have borrowed in a time of plenty, and are likely to suffer for our lack of caution. The past five years have seen Government borrowing increase year on year, despite the fact it has been a period of sustained economic growth. The basic principle is that you save when things are going well and borrow when conditions are bad. Unfortunately, the UK has been borrowing ferociously throughout the past few years of economic growth. Indeed the nation has been borrowing its way to prosperity, with much of the growth a result of rampant consumer spending, itself fuelled by easy access to cheap credit. This makes the sudden economic reversal all the more damaging.

The same problems that will affect the national budget are likely to impact on personal budgets as well. In the past few years, in spite of rising house equity and wage increases, personal debt has soared to past £1.4 trillion. Savings have fallen and debt has risen. Now, with the rising cost of living and faltering house prices, people have few resources to fall back on. Too many people are taking the government line in their personal life, attempting to borrow their way out of trouble.

A government doesn’t have the same options of scaling back that individual debtors have. With the application of will and thrifty budgeting a person can curb their expenses to a certain extent, but a government has less flexibility for cutbacks. A (hopefully temporary) increase in borrowing may well be the only choice the Chancellor can make to manage Britain’s debt on a national level. But individuals shouldn’t be tempted to try the government’s solution out for themselves. Sensible budgeting, early recognition of the problem, and the use of an appropriate debt solution remain far better ways of dealing with a debt problem than taking on yet more debt.

Today has been dubbed “Debt Freedom Day”, although not for the best of reasons. The average Briton will take 70 days just to earn enough to pay off the interest on their debt before they even begin to pay off the principal. Not only that, the day has fallen over a month later than it did last year, when it was on February 1st, as the UK slides deeper into debt.

Of course, the day means little to anyone in a practical sense, being an estimate based on national statistics. But it does give a sense of scale to the level of debt faced by many in the country. 70 days is only the average – it is sobering to consider that many of the most indebted people could well be spending half their working year or more just to pay off the interest on their debt.

Other new statistics released today show that credit card debt has decreased slightly, falling from £55.6 billion to £54.9 billion, but that the amount owed in loans has shot up from £2.6 billion to £9.8 billion. While the slight fall in credit cards is a good sign (perhaps prompted by increased caution from card providers) it will do little good if loans continue to rise. Credit cards have become such a bogeyman of debt that it is easy to forget about personal loans, many of which have punishing levels of interest. Failed consolidation loans, particularly when they are secured to a property, can be very dangerous. While it still remains small compared to credit cards, loan debt shouldn’t be taken for granted.

The other upside of Debt Freedom Day is that it gives the nation something to aim for, a tangible measure of how much the UK spends on servicing its debt each year. Next year, perhaps it will come a month sooner rather than a month later.