I've seen advertisements for government debt advice, are these official?

Some companies use phrases like government debt advice to make their service look official when in fact, there is nothing official about them at all. 'Government debt advice' usually refers to a Individual Voluntary Arrangement (IVA), which was introduced to the UK as part of the 1986 Insolvency Act as an alternative to Bankruptcy.

An IVA is a legally binding agreement between you and the people you owe money to. In an IVA, you agree to pay back an amount you can realistically afford each month, after your living costs have been taken into account, usually for a period of five years. In return, your creditors will agree to freeze interest and write off any remaining debt at the end of the IVA.

Whilst an IVA will reduce the amount you pay back to your creditors, it is unlikely to be as much as 90%, which is a figure you may sometimes see quoted. An IVA can, however, be a very effective solution for some people. In reality, an IVA will write off between 50% and 60% of an average debt of just under £60,000. Such a typical IVA would mean a reduction in the money owed to between £25,000 and £30,000.

It's important to recognise that IVAs aren't suitable for everyone. If you’d like more information, please see our IVA section.

So remember, next time you see an advertisement for government debt advice, it is probably just a commercial IVA provider trying to look more official than they are.

If you need to talk to someone about debt, please call the charity's helpline on 0800 043 40 50 to speak to an adviser.