Julian Knight: In debt? Then steer clear of these IVA rip-off merchants

Coming out of recession is often the most dangerous time for your personal finances.

In the early 1990s, the biggest year for repossessions wasn't when the economy was contracting but when it was starting to grow again. Now accountancy giant Deloitte has warned that bankruptcies and individual voluntary arrangements (IVAs) are set to jump over the rest of the year as individuals who have been battling to survive finally give up, a little like exhausted survivors from a shipwreck clinging to a piece of wood for hours on end, just letting go and slipping beneath the waves.

And this is all before the extra pressure of unavoidable tax and interest rate rises over the next year or so. As far as bankruptcies, IVAs and even repossessions are concerned, the recession may be seen as a bit of a "phoney war" because, for most of us who have kept our jobs, the effects of the 6 per cent shrinkage of the economy has been barely noticeable. Apart from wage freezes, the news has actually been quite good, with interest rates at a once-in-a-lifetime low, and inflation, until lately, well below the norm. The pain, though, is now on the way. And the big question is – will it stop us spending or not? If it does, then the double-dip recession will happen.

If you're one of those people who has struggled, or who feels that they will be vulnerable, then a quick piece of advice. Please ignore the siren calls of firms offering to solve your debt problems. They will have names and websites which make it seem they are both free and impartial, but nothing could be further from the truth.

These IVA providers will negotiate with your creditors to reduce your overall debt burden, but in the process will load you down with exorbitant fees and all too often leave you with nothing to live on – just as long as they get their pound of flesh. And by entering into an IVA, you will be tagged for future credit. My experience in dealing with these firms is that they are nothing but exploiters, ripping people off for the same service that debtors can get – free – through a debt charity such as the Consumer Credit Counselling Service. In the amoral ocean of financial services, IVA providers are bottom feeders.

On this point, I recently received a cold call – which is against a code of practice agreed with the lenders – from one of these IVA providers asking whether I had debts and if I wanted to reduce them by up to 75 per cent and "one easily managed monthly payment". They were careful not to give the firm's name and when I quizzed them further they got spooked and actually put the phone down on me – a first, I'm sure. A few days later, a friend of mine told me they had received a similar call. It seems to me that the IVA industry, reading the runes of the economy, is gearing up for another assault on the consumers of this country.

Good-bye to all that

Were you up for Lembit Opik? Doesn't have quite the same ring to it as Portillo does it? Nevertheless, Thursday's election night was pure drama with shock results aplenty. Sad to see Mike O'Brien (Labour) and Nigel Waterson (Conservative), both of whom have done good work on pensions, get the chop, bewildered by why anyone would re-elect Glenda Jackson and stunned at the gracelessness of the speech made by the losing Tory in Westminster North, Joanne Cash, who blamed "press lies" for her defeat. If you want to see toys thrown out of the pram check it out on YouTube.

But one thing is certain, amid all the human drama, the electorate has said to the politicians that you have to get away from the old tribalism and actually work together. In recent years they have failed us at almost every turn, so let's see if they are now up to the task.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

election 2015The 10 best quotes of the campaign
A caravan being used as a polling station in Ford near Salisbury, during the 2010 election
election 2015The Independent's guide to get you through polling day
David Blunkett joins the Labour candidate for Redcar Anna Turley on a campaigning visit last month
voicesWhat I learnt from my years in government, by the former Home Secretary David Blunkett
Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Ashdown Group: Editor-in-chief - Financial Services - City, London

    £60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

    Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

    £25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

    Guru Careers: Management Accountant

    £27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...

    Guru Careers: Project Manager / Business Analyst

    £40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...

    Day In a Page

    General Election 2015: ‘We will not sit down with Nicola Sturgeon’, says Ed Balls

    'We will not sit down with Nicola Sturgeon'

    In an exclusive interview, Ed Balls says he won't negotiate his first Budget with SNP MPs - even if Labour need their votes to secure its passage
    VE Day 70th anniversary: How ordinary Britons celebrated the end of war in Europe

    How ordinary Britons celebrated VE Day

    Our perception of VE Day usually involves crowds of giddy Britons casting off the shackles of war with gay abandon. The truth was more nuanced
    They came in with William Caxton's printing press, but typefaces still matter in the digital age

    Typefaces still matter in the digital age

    A new typeface once took years to create, now thousands are available at the click of a drop-down menu. So why do most of us still rely on the old classics, asks Meg Carter?
    Discovery of 'missing link' between the two main life-forms on Earth could explain evolution of animals, say scientists

    'Missing link' between Earth's two life-forms found

    New microbial species tells us something about our dark past, say scientists
    The Pan Am Experience is a 'flight' back to the 1970s that never takes off - at least, not literally

    Pan Am Experience: A 'flight' back to the 70s

    Tim Walker checks in and checks out a four-hour journey with a difference
    Humans aren't alone in indulging in politics - it's everywhere in the animal world

    Humans aren't alone in indulging in politics

    Voting, mutual back-scratching, coups and charismatic leaders - it's everywhere in the animal world
    Crisp sales are in decline - but this tasty trivia might tempt back the turncoats

    Crisp sales are in decline

    As a nation we're filling up on popcorn and pitta chips and forsaking their potato-based predecessors
    Ronald McDonald the muse? Why Banksy, Ron English and Keith Coventry are lovin' Maccy D's

    Ronald McDonald the muse

    A new wave of artists is taking inspiration from the fast food chain
    13 best picnic blankets

    13 best picnic blankets

    Dine al fresco without the grass stains and damp bottoms with something from our pick of picnic rugs
    Barcelona 3 Bayern Munich 0 player ratings: Lionel Messi scores twice - but does he score highest in our ratings?

    Barcelona vs Bayern Munich player ratings

    Lionel Messi scores twice - but does he score highest in our ratings?
    Martin Guptill: Explosive New Zealand batsman who sets the range for Kiwis' big guns

    Explosive batsman who sets the range for Kiwis' big guns

    Martin Guptill has smashed early runs for Derbyshire and tells Richard Edwards to expect more from the 'freakish' Brendon McCullum and his buoyant team during their tour of England
    General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

    Miliband's unlikely journey from hapless geek to heart-throb

    He was meant to be Labour's biggest handicap - but has become almost an asset
    General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

    On the margins

    From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
    Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

    'This is the battle of young Egypt for the future of our country'

    Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
    Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

    Why patients must rely less on doctors

    Improving our own health is the 'blockbuster drug of the century'