According to John Borgars of Equity Development, IVAs are both quicker than formal bankruptcy procedures and avoid incurring large lawyers’ fees.
Mr Borgars said that the introduction of IVAs combined earlier forms of informal and cheap agreements with the advantage of being backed by the law.
“The advantage of an IVA is that the debtor is not formally bankrupted,” said Mr Borgars. “There is no attachment of earnings so the employer does not have to be informed; interest on the debts are frozen [and an] IVA allows the debtor to retain enough of their income to live decently but without any luxuries.”
His comments come as his report shows that the number of individuals taking out bankruptcies or IVAs has rocketed since 1997 as debt grows.
Although Mr Borgars said that IVAs were still not “an easy option”, he said that for those prepared to live without luxuries for up to five years they could clear debt without the negative effects of bankruptcy.
Click here for further information on the Equity Development report.