One company alone has seen a 245 per cent increase in IVA use in the past year as more and more people take it as an alternative to the more damaging effects of bankruptcy.
Charles Howson, chief executive of Accuma Group which reported the increase, said that reasons for the rise in demand for IVA use includes the fact that “unsecured consumer lending continues to increase” along with “anticipated increases in interest rates”.
Under an IVA, an individual agrees to settle their debt within a specific amount of time, with interest rates and debt charges frozen.
As opposed to bankruptcy, an IVA is likely to be much less damaging to credit rating, which can affect mortgage purchases.
Interest rates are widely expected to increase again in November, which could further add to the amount of people struggling to manage their debt.