Sunday 4th of July 2010
An individual voluntary arrangement (IVA) could be the perfect option for some people to work their way out of debt, an expert has noted.
Credit Action statistics have shown insolvencies increased by 18 per cent over the last year and head of consumer finance at lovemoney.com Ed Bowsher said we should not "stigmatise" the solution.
An IVA is a form of insolvency that allows a debtor to avoid bankruptcy and freeze interest on what they owe, as long as it is over £15,000.
It can then be repaid over a period of typically around five years and Mr Bowsher suggested it is often the best choice for those facing a "debt crisis".
"Otherwise they could spend their whole life weighed down by a mountain of debt that they will never pay off," he added.
However, debtors choosing this route need to be aware that it requires hard work and dedication in order to be successful.
By Mark Waterman
- 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
- IVA answers may offer peace of mind to cash-strapped credit card customers
