Personal insolvency statistics issued by the Insolvency Service today, Friday November 1 2013, confirm that the Individual Voluntary Arrangement (IVA) has become the most usual personal insolvency solution for people struggling with debt in England and Wales.

There have been more IVAs than bankruptcies in 11 out of the last 12 quarters and, in July-September 2013 we reached a new milestone: IVAs now account for more personal insolvencies than bankruptcies and Debt Relief Orders (DROs) combined.

Personal insolvencies as a whole also rose (just slightly) in the last three months

The rise and rise of the IVA is a very positive development for personal debt solutions in England and Wales. It is time for creditors and policy makers to take note. IVAs represent debtors choosing to do their level best to repay as much of their debt as they cannot afford. Bankruptcy is right for many, but for some, it is an opportunity to walk away from what they owe, albeit one that comes with some fairly drastic consequences.

IVAs are achievable, affordable and represent debtor’s best efforts. Many are now being arranged for people who owe far less than ever before. At ClearDebt we believe that we can now put an IVA in place purely on the basis that it is the best solution for the debtor and without any sort of minimum level of debt or contribution becoming a major limiting factor.

The challenge for the banks, credit card companies and other creditors is to accept that IVAs are a genuinely rehabilitative procedures where people take five years of their lives to repay what they can genuinely afford. Creditors should:

• Think about how they can reward IVA-completers by treating them as rehabilitated new customers rather than FUNTS (the credit reference agencies might help here, though it is less about the data they provide and more about how the creditors choose to base decisions on that data.
• Accept that  IVAs need a minimum level of fee to make it possible for licensed insolvency practitioners to provide them to everyone who needs one. (read what our CEO, David Mond, said about this on the debt professionals site DebtSector)

And, we think the government should reconsider introducing a “Simple IVA” where only 50%  (by value) of creditors would need to vote, thus stopping a single creditor frustrating the arrangement.

This does seem like a big moment. The increased long-term importance of IVAs is clear. We hope they continue to grow – they represent people doing their best to repay what they owe and thus a mature, responsible attitude towards unaffordable debt.