Link Financial face criticism as they try to prevent consumers making efforts to repay their debts, frustrating the debt solutions industry IVA protocol.
The Debt Resolution Forum, the trade association for fee-charging debt solutions companies today (28 October 2011) warned that Link Financial, an aggressive and much-criticised debt collection and debt purchase company, was trying to prevent consumers making reasonable efforts to repay their debt by frustrating the government’s and debt solutions industry IVA protocol.
Link Financial has told DRF members that it will only accept Individual Voluntary Arrangements if they return 80% of the original debt to creditors and wants all IVAs extended to 72 months contributions.
Almost all other UK creditors accept that the IVA protocol is demanding but fair for debtors and represents their best efforts. IVAs usually last for only 60 months and often provide debt forgiveness of 50% or more.
Commenting, David Mond, DRF chairman (and CEO of debt resolution company, ClearDebt), said:
“IVAs represent a fair but challenging route for people with financial problems to repay debt with certainty. Creditor harassment has to cease, by law, when an IVA is entered into: Link Financial is clearly aiming to frustrate this wherever possible in order to be able to continue with the aggressive debt collection tactics for which it is well known.
“The DRF has written to the government’s IVA Standing Committee, the Insolvency Service and the Office of Fair Trading and is seeking legal advice. We believe that licensed insolvency practitioners may be able to frustrate Link Financial’s attempts to deny consumers debt resolution, but only at the expense of making this valuable procedure more cumbersome for all creditors – as soon as we have resolved this issue we will be advising members of the actions they should take”.
Link Financial is also proposing to limit nominee’s fees in IVAs to £750, a figure generally regarded as below cost and which would severely restrict access to the procedure, which is currently used as a route out of debt by more than 40,000 people every year.