More people are turning to Individual Voluntary Arrangements – or IVAs – as a way of avoiding bankruptcy, according to Phil Meekin, from Sheffield-based insolvency and recovery specialist Wilson Field.
Mr Meekin was commenting on figures for the second quarter of 2013, published by The Insolvency Service.
He says the increase in IVAs shows people are becoming more knowledgeable about the debt process and the support services that are now available to them.
“Since early 2009 the total number of bankruptcies has declined each quarter. At the same time the number of IVAs has slowly and steadily increased,” says Mr Meekin
“From this quarter’s figures the total number of individual insolvencies has as a whole has decreased by six per cent on the same period a year ago. Only IVAs have increased. Bankruptcies and debt relief orders (DROs) were down.
“The reduction in DROs – which are suitable for people on low incomes and with no or few assets – could be down to the increase in people using pay day loans.
“However, this is a short-team quick fix and can lead to further financial difficulties if individuals fail to manage it effectively.”