Why are the number of people in IVAs on the rise?
New data shows the number of people entering into Individual Voluntary Arrangements (IVAs), a legally-binding insolvency solution, is increasing rapidly.
The report, released by the Insolvency Service, covers bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements recorded in England and Wales between July 2016 and September 2016. There are no official statistics for informal agreements such as debt management plans.
New data shows the number of people entering into Individual Voluntary Arrangements (IVAs), a legally-binding insolvency solution, is increasing rapidly.
The report, released by the Insolvency Service, covers bankruptcies, Debt Relief Orders (DROs) and Individual Voluntary Arrangements recorded in England and Wales between July 2016 and September 2016. There are no official statistics for informal agreements such as debt management plans.
It found the number of people who entered into a formal insolvency solution because they were unable to pay back their existing debts increased for the fifth consecutive quarter, climbing by 32% over the period. This equates to 1 in 515 adults becoming legally insolvent.
The data shows the rise in insolvencies has been driven mainly by an increase in the number of people entering IVAs, which have increased by 62.4% over the period, whilst bankruptcies and DRO numbers increased by a modest 5.3% in comparison.
Individual Voluntary Arrangements were introduced as an alternative to bankruptcy. They are legally-binding repayment plans which typically last for five years.
David Rodger, CEO of debt charity Debt Advice Foundation, agreed with the report’s findings;
“The fifth consecutive quarter increase in insolvency numbers is extremely concerning. We really need to try to understand why IVAs are growing at a significantly faster rate than other forms of insolvency.
“The Insolvency Service has released other data that points to the rise being the result of specific firm’s commercial practices rather than demand for IVA’s led by the market”
“Our concern of course is that people are possibly being directed into an IVA when there may be more suitable solutions for them.”
If you are thinking about entering into an IVA, please call our advisers to make sure it is the correct solution for you on .
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