Individual voluntary arrangements (IVAs) give consumers who have struggled with debt an opportunity to start again, according to the Insolvency Practitioners Association (IPA).
The IPA has said that the arrangement between debtors and creditors as a debt solution is a formal agreement that can help indebted parties get their life back on track.
“Hopefully it’s a formal statutory resolution that evokes creditors to get back a reasonable return on money they have lent to debtors and also [gives] debtors the equal opportunity to get their life back on track and start afresh,” said Wayne Harrison, a spokesperson for IPA.
The organisation, which is a membership organisation for those involved in the insolvency, suggested that using an IVA to clear debt has risen along with bankruptcy rates.
Mr Harrison added that while an IVA can affect a person’s credit rating, the debt solution will only be chosen by people who have a poor credit rating due to debt struggles anyway.
According to Insolvencies Service figures, there were 26,956 individual insolvencies in England and Wales in the second quarter of 2007.