Figures released by the Insolvency Service today confirm that, Individual Voluntary Arrangements (IVAs) are now Britain’s most used personal insolvency procedure, accounting for more than half of all personal insolvencies.

Bankruptcy is now the least popular formal way of dealing with personal debt.

Here at ClearDebt we believe that this has largely come about because IVAs have become much more widely used for people who have lower levels of debt and lower incomes.

In fact, in many cases, it is much more appropriate for people to have an IVA, which usually lasts five years and where, if every payment is made, all interest, charges and unaffordable debt is written off at the end of the arrangement, than a Debt Management Plan (DMP), where interest and charges are not always frozen and the aim is to repay all the debt owing. DMPs are often the right choice – but, we believe, much less frequently than in the past.

Industry figures show that low value IVAs (under £175 contribution per month) now account for more than half of all IVAs – and that they are achievable for people in debt. Here at ClearDebt we now frequently arrange IVAs for people who can only pay less than £100 per month, creating a path to debt freedom that is often takes half (or less) the time it would in a DMP.

What do you think – Are IVAs eating into the DMP total?