Creditors’ representative TIX making life more difficult for disabled debtors.
We are appalled at the behaviour of the biggest organisation representing creditors in IVAs – TIX. Individual Voluntary Arrangements (IVAs) are supposed to be accepted by creditors when they are affordable, achievable and represents the debtors’ best efforts. They are supposed to be the best a person can do to repay as much as possible of the debts. It’s a five year commitment (usually) and its pretty fair for both sides – but it isn’t supposed to be set at a level that makes life horribly hard.
We are appalled. Individual Voluntary Arrangements (IVAs) are supposed to be accepted by creditors when they are affordable, achievable and represents the debtors’ best efforts. They are supposed to be the best a person can do to repay as much as possible of the debts. It’s a five year commitment (usually) and its pretty fair for both sides – but it isn’t supposed to be set at a level that makes life horribly hard.
Well, we are appalled at the behaviour of the biggest organisation representing creditors in IVAs – TIX: They have decided that a person with Disability Living Allowance (DLA), or who has a dependant family member with DLA, needs to have the whole of that allowance added to their disposable income available for the repayment of debt, unless they can prove where every penny of it goes. The problem is that for many, it just goes on caring – needing to look after a loved one means you have compromised your ability to earn and so DLA becomes a poor substitute for earned income.
TIX’s attitude, in our view, is crass. DLA varies from £17.10 per week to £64.50 per week and is is a tax-free benefit for disabled children and adults who need someone to help look after them, or have walking difficulties. (See the following link: Disability Living Allowance). A person receiving the highest rate needs constant care. Often the allowance pays for specific services. Sometimes it helps the carer have more of a life.
What TIX are demanding is that they can take every penny that hasn’t been allocated to a specific service funded by the allowance. It isn’t enough that the person has already signed away a substantial portion of their family’s earned income for five years, apparently. These are amongst Britain’s most stressed families, in debt AND disabled, or with a disabled family member.
The heart of the scandal is this: People who sign up for IVAs really want to pay as much as they can of what they owe. They sign up for five year’s effort. IVA holders who get DLA are also struggling with the burden of caring for a relative who needs constant care: TIX aren’t just greedy, they are short-sighted too – support these people and they will give creditors a fair return, penalise them like this and their arrangements will fail.
For people who feel they may be entitled to DLA, visit the government’s web page about Disability Living Allowance for further information.
Since this was written – we’ve had the following comment from TIX:
“We wish to correct the inaccuracies in this article. The actions of the Insolvency Exchange (TIX) are fully compliant with Consumer Credit Counselling Service expenditure guidelines and if there are exceptional items we ask for full disclosure to understand a debtor’s financial position and make appropriate decisions with the benefit of all the facts. We take a very sensitive view to any special circumstances of debtors – TIX never asks a debtor to reduce exceptional areas of expenditure that are funded by benefits such as disability. This did not happen in this case and it is not our policy to do so.”
As someone who works in the insolvency sector I deal with a lot of creditors and under the current topic I believe TIX are being unfair towards the debtors. I am not aware of any other creditor or creditor representative who are questioning a breakdown on what DLA monies are spent on.
For people on DLA it can be difficult to list what the monies are spent on, on a day to day basis let alone on a month by month – I know this first hand myself with my niece being autistic, together with global delay development – what she requires depends on her moods throughout the day/night and her routine.
Basically during school terms, due to her routine she doesn’t need that much, although school holidays cost an absolute fortune.
I think TIX need to consider the individual needs of debtors as their current policy on DLA is causing further distress to people with disabilities who are trying to resolve their finances.
I would also like to point out that using the DLA to form part of disposable income is also against public policy.
Guidance issued by the Insolvency Service for calculating an Income Payments Order or Agreement, if ultimately the debtor goes bankrupt the DLA is to be excluded as income and cannot form any part of the disposable income.
Disability Living Allowance is not an available asset in bankruptcy therefore follows that this should also not form part of an IVA.
The DLA is only to be used to help with living not with for paying off debts. This is what it is for and designed to do, nothing more, nothing less.
TIX I urge you to immediately review this and strive to ensure that no further DLA is used to calculate any form of disposable income as part of an IVA.
We’ve had the following from TIX, explaining their position:
“We wish to correct the inaccuracies in this article. The actions of the Insolvency Exchange (TIX) are fully compliant with Consumer Credit Counselling Service expenditure guidelines and if there are exceptional items we ask for full disclosure to understand a debtor’s financial position and make appropriate decisions with the benefit of all the facts. We take a very sensitive view to any special circumstances of debtors – TIX never asks a debtor to reduce exceptional areas of expenditure that are funded by benefits such as disability. This did not happen in this case and it is not our policy to do so.”
TIX have been in touch with us and we have published their response above. They have told us that what they want the debtor to provide is the amount of Disability Living Allowance (DLA) he/she receives and details of what it is spent on. If we or the debtor is unable to give that detail they will propose a modification to the IVA, requesting an increase in the contribution in order to try and get that information from us or the debtor.
However, TIX have further confirmed that if some or all of the specific items on which the DLA is spent cannot be identified that they will not ask for an increase in the debtor’s monthly contribution, nor will they ask for any increase if nothing is disclosed.
We apologise if our blog did not make this clear – there was certainly no intention to mislead.
However, it does beg the question – if TIX aren’t going to use the information or ask for an increased contribution, why ask for it in a proposed modification? Either way it feels like a threat to the client to provide the breakdown.
We’d like to ask other practitioners whether they feel TIX’s approach makes sense – and also whether they are finding themselves doing low debt, minimum fee, cases for people who get DLA.
Any views?