Software solutions to minimise risk of failure in insolvency arrangements

Software solutions to minimise risk of failure in insolvency arrangements

The role insolvency practitioners play in helping people struggling with personal debt has expanded in recent years. With rising numbers of insolvency cases to process and growing failure rates, insolvency practitioners are becoming increasingly reliant on software solutions to improve efficiency, accuracy and to manage the demand.

What is an IVA?

An individual voluntary arrangement (IVA) is a legally binding agreement in which all current, multiple debt repayments, including overdrafts, personal loans, credit card, store cards and catalogue debts, are combined into one monthly payment, which is distributed between creditors.

As a formal arrangement lasting usually five or six years, any debt remaining at the end of the agreement is written off, allowing those in debt to start with a clean slate.

An IVA cannot be set up by an individual, an insolvency practitioner – usually an authorised accountant or solicitor, will assess their unique financial situation and conduct deals with the creditors.

Those in debt require a stable income to pay off the monthly payments during the life cycle of the IVA., unlike bankruptcy, they will usually get to keep assets such as car and house, though it is likely debtors will be asked to remortgage to release equity.

Preparing for increased demand

In April 2020, the UK government published updated guidance for the IVA protocol in response to the COVID-19 pandemic, allowing individuals with existing IVAs to reduce payments by up to 25 per cent and take a payment holiday for three months. This guidance was revised in September 2020, further extending the payment holiday to six months and increasing payment reductions to 50 per cent.

The latest report shows a steady and successive rise in new IVA registrations since 2015, with approximately 78,000 registered in 2020. Further to this, with the government financial support schemes soon coming to an end, the industry is preparing for a rise in both personal and corporate insolvency cases.

Reducing the number of failed IVAs

Failing IVAs have always been a problem in the personal insolvency industry. There are multiple causes for arrangements failing, and debtors can miss months of repayments for any number of reasons.

The key issue for many insolvency firms is the time consuming and inefficient process of collating and managing the relevant information for each case. A lengthy, paper-based process leaves room for human error and inaccuracies, as well as less time and energy to properly support consumers.

An automated case management system streamlines this process, offering a more accurate picture of an individual’s financial circumstances and level of affordability, helping to prevent arrangement failure in the future.

Aryza Advize is a powerful solution offering a better and safer way to gather and manage customer data. Integrated open banking automatically populates information from the individual’s current account in real time, and allows those in financial difficulty to share their data in a secure manner, for a comprehensive and accurate affordability assessment.

How can specialist software help with IVAs?

With a clear overview, advisors can tailor solutions to each client’s financial needs and successfully guide them to IVA completion.

Insolvency practitioners benefit from accurate information throughout the life of the case, while creditors can easily forecast returns – with a key focus on bringing transparency to the personal insolvency sector,

Aryza’s solutions help to ensure consumers are treated more fairly, receiving the best advice for their unique situation.

With features such as task management and case workflows, secure and fully digital documentation collection and automated contact strategies, ensuring every customer is messaged at the right time via email or SMS, software solutions will save time and money, benefiting both consumers and debt advice firms.

Learn more about Aryza’s debt and insolvency management software here.