Latest insolvency figures show record numbers opting for the not-so-soft, ‘soft option.’

Added: (Fri Nov 04 2005)

Pressbox (Press Release) - From figures announced by the DTI today, of the 17,562 personal insolvencies in England and Wales in the third quarter of 2005, 5,519 were Individual Voluntary Arrangements (IVA’s) – an increase of a staggering 95% on the corresponding quarter for the previous year.

This is doubly curious in the light of the recent relaxations in bankruptcy law – brought about by the Enterprise Act 2002. The intention of the Act was to encourage struggling entrepreneurs to press the reset button using the bankruptcy option. They would then be free to move on to new ventures, unencumbered by the stigma and restraints traditionally associated with bankruptcy.

Barry Stamp, Joint Managing Director of checkmyfile.com, says “In theory, IVA’s should have lost their attraction, but as evidenced by today’s figures, they are still very much in the ascendancy. False promises by some insolvency practitioners of a ‘more invisible’ option are often cited to us by debtors who subsequently query why IVA’s appear on their credit files for six years, whether the arrangement is satisfied or not, wrecking any possibility of raising credit.

“The ‘softer option’ enables a debtor to retain their home only if those attending the Meeting of Creditors fail to challenge it. Claims that entrepreneurs may continue with ‘business as usual’ are quickly quashed when it is realised that current accounts must be kept strictly in credit.

“After 6 years of struggling to pay under a recently completed IVA, I witnessed a debtor paying very close to the amount due in final settlement. The reason was that, at the outset, creditors sought an amendment to the Nominee’s proposal that the arrangement was to be secured by a charge over the debtor’s interest in the matrimonial home. The debtor expressed a view that if he had known the full implications of an IVA, he would have declared himself bankrupt from the start. And that was before bankruptcy became the real soft option- he’d have been clear and free within 12 months under current bankruptcy law.” Adding: “I suspect that’s what most of those now seeking IVA’s will say when they eventually realise the full implications of their choice.”

Ends.
Note to editors: Launched in 2000, checkmyfile.com is the UK’s first Internet based credit reference agency, aimed firmly at serving consumers. checkmyfile.com is fully independent and was the first in the UK to provide consumers with online access to their credit files, to offer consumers the ability to check their own credit score for free and to give plain English explanations of how credit scoring works. With over 1.1m registered customers and visited by over 20,000 unique new visitors every day, checkmyfile.com is ranked within the World’s top 50,000 websites.

For further press information please contact: Richard Goedegebuur at checkmyfile.com on 0207 193 6021 or email: richard.goedegebuur@checkmyfile.com
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