Money News
The OFT (Office of Fair Trading) has warned consumers to be careful before responding to unsolicited mailings which advise them to cancel existing individual voluntary arrangements (IVAs) and which suggest they opt for an alternative debt management solution, such as bankruptcy, instead.
Some such mailings sent out to consumers misleadingly suggest to recipients they may have been mis-sold the IVA and/or that bankruptcy may be more suitable for their circumstances when this may not be the case.
These mailings are being targeted at vulnerable consumers in IVAs by companies who appear to have accessed their personal contact details from the public register of people in IVAs, which the Insolvency Service is required by law to maintain.
The OFT says it considers such claims to be in breach of its debt management guidance not only if they are misleading but also if they fail to explain the consequences of terminating an IVA agreement and going bankrupt which include: much of the initial monies paid to a company on setting up an IVA going towards meeting the insolvency practitioner's fees and not paying off the debt itself. Therefore, if the IVA fails early on, creditors won't have received any payments, the consumer's debts won't have decreased and their financial position will likely have worsened.
Meanwhile, the watchdog has issued warnings to 12 businesses and given them four weeks to respond. They've been told to amend any misleading claims made in their IVA advertising and promotional material and to be more transparent about the possible implications for consumers if they do terminate an IVA agreement.
09 June 2008 © Moneyextra.com
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