IVAs ‘can be best answer in difficult circumstances’

An individual voluntary arrangement (IVA) can be the best solution for people who have run out of other options for dealing with severe debt, an expert has said.

External affairs director for Equifax Neil Munroe said that those who get into debt may be able to solve it through contacting their creditor early on and seeking to negotiate a solution.

But for some, he noted, the situation may have deteriorated to such a point that this is no longer feasible.

Taking an IVA or going bankrupt is a "quite extreme" solution, but, observed, these may be the only viable option left for consumers who "don't have any assets or equity left to cover, or the ability to service their debt".

"Having an IVA or becoming a bankrupt does have some quite severe consequences, so it's not something we would recommend that you do lightly but it may be the only way out at the end of the day," he concluded.

For those who are deep in debt, seeking advice from experts on what the best response is can help identify the right solution.

For some, negotiating with creditors is possible, while for others a debt management plan may be a viable way of tackling the situation.

The IVA option is one that has proved more favoured than bankruptcy in recent times, according to data from the government's Insolvency Service.

In two of the last three quarters, IV's have been the preferred insolvency option, including the April to June 2011 period.

During those three months, 12,143 IVAs were taken out in England and Wales, compared with 11,113 case of individual bankruptcy.

By Joe White