Figures show that IVAs could be dropping

Over recent years, many debt laden consumers in the UK have been looking at alternative ways to deal with their unmanageable debt levels.

Many households in the UK are struggling with a range of unsecured debts, such as credit cards and personal loans, and in many cases borrowers are simply unable to keep up with repayments on the debts. As a result of this, many debt management companies have been putting out glossy adverts relating to IVAs, encouraging those with unsecured debts of over £15,000 to look at taking this route in order to free themselves from debt more quickly.

The recent spate of advertisements from IVA specialists has resulted in many consumers in the UK looking into taking this route, and banks have seen the level of bad debt and the number of IVA applications rise over the years.

An IVA is an Individual Voluntary Arrangement, where a reduced amount per month is paid to each creditor for a period of five years, after which time the remainder of each debt is written off. However, the majority of creditors have to agree to the IVA in order for it to be accepted.

The situation with IVAs has been getting so bad that many banks have taken a firmer stance on those applying for IVAs, and a rising number of applications have been rejected by lenders. Experts now think that this could be one of the reasons why recent figures show that the number of people embarking upon an IVA scheme has been dropping.

A spokesperson from PricewaterhouseCoopers stated: "Our indications are that month on month IVA numbers have been falling gradually."

Regulatory bodies have also been looking into claims made by IVA specialists, and have said that consumers are not getting enough information, are being led to believe that a larger percentage of their debt can be written off than is actually the case.

Tom Smith
13.03.07