Benefits of IVAs to UK consumers

While both the UK and the US are facing spiralling personal debt levels, IVAs, which are not available in the US, have been welcomed as a good way to tackle serious debt without declaring bankruptcy.

“In the UK individuals have access to IVAs, which are in my mind the most powerful solution available to people in debt,” said Steve Rhode, president of Myvesta UK which helps UK consumers with debt.

Introduced to stop people from declaring bankruptcy and the hardships this involves, IVAs allow people to freeze their debt as long as they agree to monthly repayments.

Mr Rhode added that not only were IVAs “revolutionary” in how consumers pay off their debts, but they are a “custom solution based” on how much people can afford to repay.

David Mond, chief executive of IVA experts, ClearDebt, agreed with Mr Rhode but warned that many UK debtors who might be made debt freeby an IVA were currently being denied one – thanks to the high fees charged by many IVA providers.

“Most of our competitors are not interested in people who owe less than £15,000 or £20,000,” said Mr Mond.

“ClearDebt can help people with debts as low as £7,500, but few consumers realise the amount that their advisor charges creditors makes a huge difference to whether they will be able to even put forward an IVA.”