Individual voluntary arrangement ‘could have helped consumer’

A consumer failed to get her debt wiped out over a five-year period because she did not have an individual voluntary arrangement (IVA) in place, an expert has stated.

Writing for the Daily Express, Maisha Frost highlighted the problems faced by Elizabeth Bastow, who sought a debt management plan in 2002 when confronted with debts of over £18,000.

However, the plan was not a successful one and she was still left owing over £11,000 in 2007, with no prospect of being debt free until 2012.

And because the deal had been arranged before new regulations appeared to tighten up on the provision of such debt help, she was unable to seek recompense via the financial ombudsman.

Now such rules are in place, consumers may feel confident about the help they can get, but for Ms Bastow, the situation is still a severe one and Ms Frost noted the absence of an IVA was central to this.

Ms Frost said such a move could have frozen the interest and charges, with the debt clear by 2007.

Since the problems emerged, Ms Bastow has switched to ClearDebt, whose spokesperson Andrew Smith noted: “If an IVA had been do-able, by August 2007 we have calculated Ms Bastow would have paid £12,000 and the remaining debt written off.”

The use of IVAs has been tipped to rise in 2011 by Justine Modray of finance website Candid Money.

She recently suggested the effects of government spending cuts on employment will leave some people in a situation where they will need extra help and many will take this route.

By Joe White