Number of Bankruptcies to Continue to Rise

Over the past few years, the use of Individual Voluntary Arrangements (IVA) as an alternative to bankruptcy has skyrocketed and now, an executive of a major debt management firm said that the number of Britons that file for bankruptcies or IVAs could increase fivefold by the year 2010.

Paul Carter of debts.co.uk said, the number of Individual Voluntary Arrangements (IVAs) entered into each year in the UK could grow from around 20,000 in 2005 to more than 100,000 by the end of the decade.

The IVA is a relatively new concept that allows those in debt to create a special arrangement with their lenders to repay a certain amount of their debt monthly and then cancel any more accumulating interest. IVAs have become very popular among those who have large debts, but do not want to declare bankruptcy.

According to the Insolvency Service, in 2005, more than 20,000 UK citizens who had outstanding debts took out IVAs while that number had far exceeded 20,000 in 2006.

Mr Carter said: "With the total number of IVAs expecting to exceed 40,000 in the current year and with some reports suggesting that the total number of IVAs will continue to grow to over 100,000 by 2010, the signs remain that the significant demand for the group's range of services will continue in the future."

According to the report from debts.co.uk, the company has issued an average of 130 IVAs a month and the number taken out monthly has increased steadily over the past few months and looks to continue to rise in the foreseeable future.