Saturday 28th of November 2009
Individual voluntary arrangement (IVA) advice companies increased in number three years ago as a growing percentage of consumers struggled to keep up with debt repayments, a report says.
According to the Financial Times, IVAs were provided as a solution for those whose finances had become overstretched, allowing borrowers and creditors to reach an agreement as to what proportion of debt should be paid back, usually over a five-year period.
Many IVA providers have seen an increasing uptake in the debt solution, which could highlight how three years ago - the beginnings of the economic downturn - many people’s finances which were just in the black were suddenly tipped into the red when cheap credit because more expensive through higher interest repayments.
In such circumstances, an IVA can freeze interest rates on unsecured debt, such as store and credit cards, allowing a larger percentage of monetary commitments to be cleared as money is no longer going on interest repayments alone.
The newspaper notes the view of then head of Royal Bank of Scotland Sir Fred Goodwin, who said IVAs - if used properly - could prove to be to everyone’s advantage.
By Chris King
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Bankruptcy-threatened Britons may turn to IVA advice
