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|Individual Voluntary Arrangements: Outcome Status of New Cases|
|Thursday, 29 October 2015|
Individual Voluntary Arrangements: Outcome Status of New Cases Registered Between 1990 and 2014, England & Wales. This statistical release shows the outcome status of Individual Voluntary Arrangements (IVAs) registered between 1990 and 2014 in England and Wales.
- The percentage of IVAs failing within the first three years decreased for IVAs registered since 2011, compared with those registered before 2008.
- Over 12% of IVAs registered in 2008 and 6% in 2007 were still ongoing, having started around 7 to 8 years earlier.
- IVA failure rates increased for IVAs registered between 2001 and 2007. Failure rates for 2008 and later registrations are uncertain as many are still ongoing.
Trends in IVAs registered since 1990
The number of new IVAs registered each year has increased substantially over the period covered, from fewer than 10,000 annually up to 2003, to over 50,000 in 2010, with a particularly rapid increase between 2004 and 2006. From 2009 to 2013 the level of cases was between 46,700 to 50,700, and in 2014 reached the highest annual total of 52,200. IVAs comprised 53% of total individual insolvencies in 2014, a much higher proportion than the period prior to 2004 (typically less than 25%).
The increase in IVAs between 2004 and 2006 coincided with high levels of advertising by companies which manage these arrangements. The reduction in 2007 and 2008 could be because of creditors rejecting IVAs with low repayment rates. In response to concerns raised, the Insolvency Service led the development of a voluntary agreement aimed at encouraging best practice and streamlining the process for straightforward consumer IVAs. This “IVA Protocol” has been in effect since February 2008 and was updated in January 2014.
Termination of IVAs
Between the years 1990 and 2002, inclusive, the percentage of IVAs registered each year that eventually resulted in termination was around 30% (the lowest figure in this period being 28% for 2001 registrations and the highest 33% for 1995 registrations).
The percentage of terminations has since followed a generally upward trend from 30% for 2002 to the level for 2007 registrations, which currently stands at 40%. As at October 2015, 30% of IVAs registered in 2009 were still ongoing (Table 1 below), so the percentage of IVAs registered this year which result in termination is likely to increase going forward.
It is not possible to make direct comparisons between termination rates for IVAs registered from 2010 onwards, and those registered before, as over half of IVAs are still ongoing for more recent registrations.
It is usual practice for IVAs to last for five or six years. However, as at October 2015 over 6% of IVAs registered in 2007 were still ongoing, having started around eight years earlier; and over 12% of IVAs registered in 2008 were still ongoing, having started around seven years earlier. There are a number of reasons why IVAs could last for this length of time, such as:
- the individual originally agreeing to an IVA that would last for this length of time;
- payment holidays or other variation of an IVA agreement which has lengthened its original duration;
- IVAs being kept open pending the outcome of a claim for compensation in relation to mis-sold payment protection insurance.
Percentage of IVAs failing within one to three years of registration
Looking at the percentage of IVAs that failed within one, two or three years of registration, comparisons can be made on a more consistent basis between registration years. However, a discontinuity in the data means that data for 2009 and 2010 are unavailable (see the notes which accompany this release).
From 2000 to 2005, the percentage of IVAs that failed within one year decreased from 9% to 6%, and the percentage that failed within two years decreased from 18% to 16%.
The percentage that failed within three years, however, increased from 22% to 25% over this period, and in 2006 increased to 29% - or nearly one in three IVAs registered that year.
Over one fifth (21%) of IVAs registered in 2007 failed within the first two years. For 2011 registrations, this fell to 11%, and has been stable for 2012 and 2013.
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