Insolvency Service Shut Down Debt Solutions Company

The Insolvency Service has shut down a company that offered debt solutions and took referrals from a website called IVA Council.

The self-proclaimed ‘one stop shop for dealing with bankruptcy,’ UK Bankruptcy Limited (UKB) was ordered into liquidation after an investigation by the Insolvency Service.

The company was based in Dorset, and attracted clients through advertising and referrals from the official-looking website - IVA Council. 

The investigation found that the company derived the majority of its income from fees charged to clients who used UKB to make themselves bankrupt. The fees, often running into thousands of pounds, bore no correlation to the work undertaken or the extent of the clients’ level of debt. The advice given was often basic and could easily have been obtained for free.  

In some cases the fees charged to clients’ credit cards rolled into the ensuing bankruptcy, whilst the amount of fees appeared to equate to the amount of credit still available on their cards. This action meant that, in effect, the clients’ creditors were funding the company’s fees with no prospect of repayment.

The investigation also found evidence that some clients allowed the company to maximise the amount of fees charged to their cards, in return for which they were given cash back.

Between about October 2007 and June 2008 the core business of UKB was generated by leads provided by an organisation called the IVA Council, an unincorporated association which purported to be a voluntary independent body that monitored the insolvency industry. 

In reality, IVA Council was a marketing tool that generated leads for UKB by suggesting to individuals that they had been mis-sold an individual voluntary arrangement (IVA) and that they would be better placed financially by petitioning for their own bankruptcy. Clients referred via the IVA Council were almost invariably persuaded by the UKB to discontinue an existing IVA and enter into bankruptcy.  

Stephen Speed, chief executive of The Insolvency Service, said, “At a time when finances are so tight for so many people it is regrettable that a business like UK Bankruptcy Limited should use dishonest practices to exploit the demand for debt advice for its own financial gain. 

“I hope the action we have taken will serve as an important reminder to anyone in debt; good quality advice is freely available from charitable organisations.”

Posted at 04:07PM Dec 13, 2010 by Marc Stenton in Insolvency  |  Comments[0]