IVAs are popular with young people in debt
IVAs are useful to many people in debt because they offer a way to "write off" some of what they owe, rather than simply delaying the time before the money has to be repaid.
That's the opinion of Nick O'Reilly, vice president of the Association of Business Recovery Professionals. He explained that IVAs were particularly useful for young people in debt as it lets them get their finances in order before they look to apply for a mortgage.
"If you get yourself into debt problems, you can write to your creditors and say: 'We can't pay, could you freeze the interest?', and they may well do. But there's never ever a release from those debts," he explained.
"The thing about IVA is that it's a finite period, and you know that providing you abide by the terms of the arrangement, at the end of it it will be successfully concluded and you will be able to write off a proportion of the money that you owe."
"An awful lot of people in the twenties are getting themselves into debt problems, have no real assets, and the voluntary arrangement allows them the chance to at least get their affairs in order before such time as they perhaps need to get a mortgage and settle down," Mr O'Reilly concluded.
A study by the Insolvency Service recently revealed that people's attitudes towards bankruptcy has changed in recent years. It found that consumers attached less stigma to IVAs than they used to.
Source: moneyhighstreet.com
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