Will the IVA bubble burst in 2008?
In 2006, the IVA was a huge hit for those in severe debt. Although it was originally intended for small business owners rather than individuals, the IVA went from being an unknown debt solution to one of the best debt solutions available. As a result, the IVA expanded and mass advertising made it one of the most accessible and recommended debt solutions for the general public.
Many creditors are hoping that 2008 will be the year that the IVA bubble will burst. Some have become very hostile towards the IVA and are insisting on higher rates. Northern Rock voted against nearly every IVA proposal that was placed before them.
During 2005 and 2006, the IVA increased massively but this tapered off as creditors became more demanding and during 2007, the IVA lost its place as one of the most affordable alternatives to bankruptcy.
The need for IVAs is still here as personal debt goes through the roof and the sub-prime housing market hits rock bottom. Although this was primarily a problem for the US, the United Kingdom has suffered dramatically and people have been finding it increasingly difficult to re-mortgage their homes in the sub-prime sector. The United Kingdom has become swamped in debt and people are going to need every possible debt solution available to give them some breathing space to clear their backlog of mounting bills.
However, 2007 ended on a positive note as the BBA industry standards and TDX accreditation process showed signs of compromise which will help to weed out some of the unscrupulous IVA companies and restore the trust that has been so badly lost between Insolvency Practitioners and creditors. This should ensure that an IVA will win back its approval and the public can breathe a sigh of relief as they continue with a debt solution which will help them see some light at the end of the credit tunnel.
