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Lenders In Iva 'rogue' Loan Abuse

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Lenders in IVA 'rogue' loan abuse

Dan Atkinson, Financial Mail

3 June 2007, 11:57AM

Unscrupulous lenders are abusing their power over problem debtors to force them into expensive 'consolidation loans'.

They are refusing to approve individual voluntary arrangements, an alternative to bankruptcy under which part of a person's total debt is written off.

The lenders then use their knowledge of people's financial troubles to try to sign them up for a master loan, which not only charges high interest but is also sometimes secured on a debtor's home.

'It is not illegal, but in my opinion it can sometimes be immoral,' said Peter Sargent, a council member of R3, the insolvency practitioners' trade body.

One senior insolvency source, who wished to remain anonymous, said: 'This is an abusive creditor practice.'

But for ruthless creditors there are three big advantages - quite apart from the obvious fact they do not have to write off any of the money owed.

First, they can charge more for a consolidation loan. Second, they can try to secure it on a debtor's home.

And third, unlike an IVA, it will not have to be listed in the lender's accounts as a problem loan.

Sargent, a partner with insolvency firm Begbies Traynor, said: 'My advice to anyone in trouble is not to borrow any more money.'

British Bankers' Association executive director Eric Leenders urged anyone with debt problems to take free, impartial advice from credit counselling services or Citizens Advice.

Last year there were 44,332 IVAs in England and Wales compared with 20,293 in 2005.

• Have you been turned down for an IVA only to be offered a consolidation loan by one of your creditors soon afterwards? If so, call Dan Atkinson on 020 7938 7712 or email him at dan.atkinson@mailonsunday.co.uk.

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I said at the time when the banks started puling rank against IVA's that they seemed really pissed off that the IVA companies were making more money then them after the lenders have spent so much time financially grooming their customers and burying them under a pile of debt.

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It astonishes me.

If I take out credit I agree to pay back the money loaned to me with interest for the privilege of borrowing. This is a fact of life, borrow and pay interest or don't borrow and save for the things you want / *need.

Whilst I am not an advocate of banks and also realise that many "people" are financially incompetent (as I have been) we still need to take responsibility for our actions and pay our debts.

As for comments from companies arranging IVA's their VI's will mean that they will do everything in their power to ensure that the IVA doesn't die and grows from strength to strength.

As the comment says

British Bankers' Association executive director Eric Leenders urged anyone with debt problems to take free, impartial advice from credit counselling services or Citizens Advice.

Stop these parasitic IVA companies they are as bad, if not worse than the banks.

*NEED is of course a subjective word as I need a Lamborghini but I wouldn't borrow the money to buy one.

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Lenders in IVA 'rogue' loan abuse

Dan Atkinson, Financial Mail

3 June 2007, 11:57AM

Unscrupulous lenders are abusing their power over problem debtors to force them into expensive 'consolidation loans'.

So what happens if the lender refuses to grant an IVA and the lendee refuses to take out a consolidated loan product? Stalemate?

edit:typo

Edited by The Colour

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Guest casaloco

If they turn down the IVA (as is increasingly happening) and you refuse their consolidation loan offer then it depends on if you own a house.

If you own a house they will make a charge against your house and force you to sell it. If you don't sell it quick enough (30 days I think) then they take your house off you and sell it at auction. This applies even if the debts WEREN'T secured against the house. Effectively, all debt is now secured against your house.

If you don't have a house they will either setup a payment plan, (and as I understand it, go to court to enforce it if need be) or if they think you have enough assets to cover it they will declare you bankrupt, move in and take all your valuable possessions.

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chichi - I just read that article that you link to. That is horrible. We really are destroying the world :-(

Yikes, that picture has really upset me too. Poor poor creature :( Sometime I really wish that bird flu would hurry up and sterilise the Earth of us humans.

Going for a walk....

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If they turn down the IVA (as is increasingly happening) and you refuse their consolidation loan offer then it depends on if you own a house.

If you own a house they will make a charge against your house and force you to sell it. If you don't sell it quick enough (30 days I think) then they take your house off you and sell it at auction. This applies even if the debts WEREN'T secured against the house. Effectively, all debt is now secured against your house.

this isn't actually the case at the moment, the creditor has to get a CCJ, the debtor will submit an I&E to the courts and a monthly ammount is set by the court. If the debtor defaults on this agreement the creditor can put a charge on the property, but can't make you sell up, only take the money when the creditor sells.

But, under proposals outlined in the Tribunals, Courts and Enforcement Bill ...

http://news.bbc.co.uk/1/hi/programmes/moneybox/6737261.stm , Then the scenario you desribe is a real probablility. This is very wrong IMO, as the difference in risk to both the lender and borower is generally reflected in the interest rate being applied. For lenders to effectivly charge unsecured rates for what can become secured at the first sign of trouble is a swing too far torwards the lenders interest.

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