Date: 22nd February 2011
Location: Offices of The Debt Advisor – Manchester
Interviewee: Beverley Budsworth
How would you describe your company?
The Debt Advisor business was established in 2000 has always been based in Old Trafford, Manchester. We have an excellent team in place and I am very much involved in all aspects of the business; being the Insolvency Practitioner as well as the Managing Director definitely keeps me on my toes!
We launched a campaign to bring a greater understanding of debt and we also have an open door policy at the office; our clients are more than welcome to come in for a consultation.
Through our hard work, we have won numerous awards which we are incredibly proud of.
Where does your company fit into the IVA industry?
I’d like to think that The Debt Advisor is at the forefront of the IVA industry.
My experience of dealing with personal debt issues led to me being invited to join a number of government-led working parties in 2004 and 2007 to look at ways of simplifying the formal procedures of helping people out of debt. I still continue to work with several of the leading professional organisations in the sector; I am a member of the IPA (Insolvency Practitioners Association), the Personal Insolvency Committee and also a board member of the Debt Resolution Forum.
Our trained advisors are also highly experienced with the majority of them taking the BTEC in Debt Resolution examination.
What geographical area do you cover?
The whole of the UK, Scotland & Northern Ireland
What regulation are you subject to and how does this protect your clients?
As a business we have opted for regulation over and beyond that which is required. We are a member of DEMSA which has OFT code 2 approval. In simple terms it means that we have passed an audit and demonstrated that our people are properly trained, our client account is audited annually and we are subject to ongoing monitoring.
We are also members of the DRF – Debt Resolution Forum who promotes professional standards for resolving clients’ financial problems. DRF’s regulation is undertaking by The Insolvency Practitioners Association “IPA”
As an Insolvency Practitioner, I am also regulated by the IPA and am a member of the Association of Recovery Professionals, known as R3 who strive to ensure all their members adhere to best practice guidelines.
What happens when a potential client gets in touch with you for the first time?
I and our team of advisors deal with all enquiries as soon as they come in. We really do need to understand where a client is up to which means we will spend 40 minutes or more establishing the facts. If we can help with a debt resolution scheme we will explain how our charges work.
The codes we have signed up to require that we give best advice at all times. This includes discussion of all appropriate solutions. IVAs and debt management plans can provide welcome relief from debt but these options need careful consideration.
“What happens to my property” or “what fees do you charge” plus “what happens if I lose my job”. The IVA protocol established in 2008 really has helped to make IVA’s a very viable solution and provide comfort that under no circumstances are you required to sell your property and you can have a payment break of up to 6 months if you lose your job.
The subject of IVA’s can be confusing. How do you go about ensuring that your clients fully understand the whole IVA process?
Our ethos is ‘managing people’s expectations’. This way, clients understand exactly what to expect and hopefully we can take their breath away and exceed their expectations. Our consultations are thorough – our advisors have compliance checklists which they must follow which helps us monitor compliance and quality and which should ensure that all issues are covered.
If an IVA client has equity in their home, or owns a car of significant value, how will this be dealt with by an IVA?
Equity in the Home – The IVA protocol provides that there is no requirement to sell your residential property. But it does require that in year 5 you look to remortgage the property at a maximum of 85% loan to value less the sums already secured on the property. If a remortgage is not possible, you can introduce a lump sum from a third party in lieu of a proportion of your equity or if that is not possible, the IVA will be extended for up to 12 extra months for contributions to be paid in lieu of equity.
Car – generally an IVA would exclude a motor vehicle as this is required to get you to work. But if the car is high value creditors could require that you trade down the vehicle.
All of these matters are dealt with at the advice stage.
What is your experience of whether an IVA will affect someone professionally?
An IVA normally will not affect your job. But if you are a regulated professional such as a solicitor, there are notification requirements to the regulator which could effect your position. An IVA once approved is logged onto a register which is picked up by credit reference agencies and your employer could get to know of your IVA if perhaps they carry out annual fitness checks.
We consider these aspects before recommending an IVA.
Do you charge upfront IVA fees?
The work we carry out prior to approval of the IVA is covered by our Nominees fee which is agreed with the client.
The Nominees fee is also agreed with creditors who will allow the first 5 or 6 contributions to clear the Nominees fee. As such the client does not have to find a big lump of money.
Once appointed as Nominee we will arrange for a standing order to be set up to collect the monthly contributions which will be agreed with the client at an affordable sum.
It takes around 6 - 8 weeks to set up an IVA and the first two payments will be treated as a deposit towards our Nominees fees. Once the arrangement is approved the client will only pay the monthly contributions agreed by their creditors.
How do you determine what your fees to handle an IVA will be?
The nominee fee is a fixed fee depending on the complexity of the IVA but typically is between £1,000 and £2,000 plus VAT (this could be higher for a complex case which involves assets, property and continued trading.
The supervisory fees are normally capped by creditors at between 15 and 20% of realisations and are drawn monthly from the monthly contributions. This is for post-appointment work in maintaining your IVA until the IVA is concluded.
How often do you direct people towards debt solutions other than an IVA?
Quite frequently. An IVA isn’t always appropriate, and it may be that debt management or bankruptcy is more appropriate.
We also have to make sure that an IVA is viable and doable as there is no sense proposing an IVA which may fail and leave the client in a worse position.
In the last year, 95.5% of our IVA cases have been accepted by the creditors.
Once an IVA has been accepted, what contact will continue with your client during the term of the IVA?
Once an IVA has been accepted, our clients have their own administrator who will look after the client and their IVA over the 5 year period. Client reviews are done every 6 months so our administrators will ensure they make contact on a regular basis in order to make sure the arrangement is running smoothly.
We also have a portal which our clients have access to which enables them to keep track on how their arrangement is progressing.
Why have you chosen to become one of the IVA Advice Forum experts?
I have campaigned over the past 10 years to make sure non lending solutions are ‘fit for purpose’ and am pleased to be involved in a forum where the public can search or ask their own questions and gain advice. I completely understand that debt is always a difficult issue for someone to come to terms with and contributing to the site means that I can offer my expertise to all those that need it.