May 10, 2010
Why Is An IVA One Of The Most Popular Debt Solutions
In 2009 going on 50,000 people entered into an IVA agreement, and many more beyond that figure looked for assistance and advice on IVA agreements and many are still doing so now. Why are so many people looking at an IVA company as the solution to their debt problems?
Well, the first thing to bear in mind is that the only people seeking IVA advice are those in dire financial straits. These are people who frequently find they cannot make their monthly repayments on their debts and are struggling to find a way out.
The numbers of those taking out formal debt restructuring have recently risen. This can largely be attributed to the 18 month long recession that haunted the UK. Unemployment figures rose rapidly and even those who kept their jobs often faced pay cuts. A sudden drop in income is often a cause for financial concern and in light of the economic downturn, it perhaps comes as little surprise that so many more sought help.
Prior to the IVA (and the more recent Debt Relief Order) those who simply could not repay their debts may have been forced into bankruptcy. The IVA is an alternative to that. Its appeal is that is helps you to negotiate your debt repayments to an affordable level without having to go bankrupt. Bankruptcy traditionally has something of a stigma attached and, given its very public nature, causes embarrassment many. An IVA often involves the interest being frozen, charges stopped and sometimes a reduction in the overall amount you owe, based on your income and cost of living. This is an obvious benefit to an indebted individual and the creditors see the plus side too. If an individual were to declare themselves bankrupt, the creditors would be unlikely to get any money back at all. At least through an IVA, they have a good chance of getting something.
Even though the recession has now formally ended, the effects it had are likely to last for some time yet and experts believe that the numbers of those taking out IVAs may be similar in 2010 to 2009.
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