Predicted Increase in IVAs

With the entry of new legislation that goes into effect, the demand for individual voluntary arrangements(IVAs) is expected to increase according to the Money, Debt and Credit Group, a company that helps debtors reduce their debt. With sales of £1.04 million in the 64 weeks preceding December 31st, it closed with a pre tax loss of £2.83 million. Though no comparative figures were available, the company stated that it expects to see profits beginning in 2008.

The company stated that it has seen a substantial increase in IVAs, which are a form of debt management that allow debtors to avoid bankruptcy. In 2006, 561 cases were approved, and at the present time, 1,257 cases are currently in progress. With United Kingdom consumer debt now at £1.3 trillion, the company feels that the IVA market will continue to grow. Between 2005 and 2006, the number of IVAs that were registered increased from 20,292 to 44,331.

One third of all unsecured debt in Western Europe is borne by people in the United Kingdom with the average UK consumer owing over two times as much as the average consumer in all of Western Europe according to research that was conducted by Datamonitor. Because of this, Money, Debt and Credit feels that personal insolvency solutions provide companies who work with debtors an ideal opportunity for growth.

Another factor that is likely to have an effect on the number of IVAs is new legislation that will take effect over the next year. Currently IVAs must be approved by seventy five percent of creditors for debts under £75,000, but new legislation will allow it to be approved by a majority of creditors instead of the current seventy five per cent. The company feels that this new legislation will increase the demand for their services and acceptances for IVAs, thus providing an increase in revenue.

Diana Middleton writes on matters relating to debt advice in the UK, and especially debt problems. She is particularly interested in personal finance, writing on best approaches to getting a secured loan and debt relief, and the background issues relating to debt consolidation.