There are numerous people who have to work through debts that came about through an Individual Voluntary Arrangement or IVA. Out of all these individuals, roughly 1,500 each month have to claim PPI they do not have. The claim process forces these individuals to spend more time than would normally be necessary to exit the insolvency register.


Claiming PPI in IVA

As a general practice, nowadays IVA providers ask debtors to supply information related to reclamation. Forcing debtors to sign documentation is a standard practice regardless of whether the individual claims to have a PPI on their record. Until any indication of a PPI claim is resolved in some manner, whether through settlement or official rejection, an individual cannot escape their IVA and return to their normal way of life.

However, the issues related to strict regulation go beyond the inconvenience that such requirements place on the individuals directly involved. The entire system is connected, and a delay for anyone creates a backlog that everyone must deal with. In some cases, the wait for an individual who has completed his or her IVA to be removed from the register can run as long as a year beyond the normal time frame. This additional time spent waiting can prevent a person eager to rebuild their credit and life from doing so in a timely manner.

Individual Voluntary Arrangement (IVA)

An IVA is a contract that allows a debtor to repay creditors over an ostensible period of five years. Sometimes referred to as “light bankruptcy,” IVAs are a significant hurdle to overcome for individuals who have gotten behind on their obligations. However, there are some differences between an IVA and a formal bankruptcy.

One of the most notable differences between IVA and bankruptcy is that an IVA allows an individual to retain their home. Another of the differences between an IVA and a bankruptcy proceeding is that the debtor’s disposable income is required to be paid toward the settlement of the debts.

The trying economic conditions continue to hurt more individuals. In 2012, there was an eight per cent increase in the number of IVA entries versus 2011. Out of the approximately 30,000 people each year who take out an IVA, it is estimated that as many as two thirds of these people are forced to reclaim. The average waiting time an individual has to undergo is between three and six months. Because of PPI reclamation, people who have otherwise completed their IVAs need to wait longer to be completely finished.

One problem that is occurring in many cases is that people are being forced to agree to the PPI refunding process. This requirement is not based on any individual characteristics of the person, but on a blanket assumption about the correlation between PPIs and IVAs.

An IVA is a harsh measure. All of an individual’s disposable income is required to be paid into the program, and the process can drag for as long as five or six years time. An individual enrolled in the program will tend to want to finish it as quickly as possible. The more quickly the individual finishes their IVA, the sooner a more normal life can resume. For both credit restoration and quality of life reasons, any delay in being finished with the IVA process is an irritant to most people.

During the early part of 2012, there was a rash of speculative claims. These claims were for PPI refunds, and in many cases there was no record within the claim firm of whether or not the individual had a PPI in the first place. The number of these claims rose by 247 per cent over only a six month period.

There are genuine claims and bogus ones. Because of the massive volume of bogus claims in recent months, the refunding system has grown clogged and inefficient. This inefficiency and clogging have caused the payments to customers with legitimate claims to slow down dramatically.

PPI Claims in IVA

PPI policies were sold to loan customers of many varieties. They were intended to protect against the defaults of mortgages, credit cards and other debt instruments in the event of illness or other overdue circumstances. However, a large number of customers were unaware that they had bought the policies in the first place. Furthermore, in hundreds of thousands of cases making a successful claim would have been essentially impossible.

On the whole, the entire process has proven to be a frustrating cascade failure of the system. As more customers have had claims clog up the system, the problem has only become worse for other customers. With so many claims to be sorted out, and so much red tape to be sifted through, the waiting time has begun to skyrocket. The situation has proven complicated and difficult for a large number of people who only wish to return their lives to a normal state.

PPI claims and individual voluntary arrangements have been linked for several years. There have been innumerable loan customers forced into purchasing PPI policies, even when they were not aware of buying them. The large number of claims, both real and bogus, have clogged the system. The volume of claims to sort through has grown to such an extent that the waiting process after the IVA process is otherwise complete has become unnecessarily long.

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Tim Capper reports on Financial Mis-Selling for Maple Leaf Financial. Our aim is to ensure you get honest advice and proper guidance to ensure a suitable recommendation can be made to pursue a financial claim

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Tim Capper

Bringing you financial news and information in plain english for Maple Leaf Financial. My aim is to help readers understand these often complex financial instruments.