The number of IVAs started each year since 2009 is summarised below. Annual volumes have doubled since 2015.
Included in this article:
- IVA Statistics Table
- What is an IVA?
- Why is this solution so popular?
- What are the alternative debt solutions?
IVA Statistics Table
|Qtr 1||Qtr 2||Qtr 3||Qtr 4||Total|
Total number of IVAs started per year in England & Wales
Source: The Insolvency Service Official Statistics
What is an IVA?
The IVA (Individual Voluntary Arrangement) is one of the most commonly used personal debts solutions. By comparison, during 2021 only 8,700 people went bankrupt compared to 81,000 who started an IVA.
The solution is available in England, Wales and Northern Ireland. In Scotland, the equivalent is known as a Trust Deed.
It is basically an offer to settle the unsecured debt that you owe. The settlement is normally paid in monthly instalments over a 5-6 year period. It can also be paid in one lump sum – known as a lump sum or full and final payment IVA.
Monthly payments can increase if your income increases. At the end of the agreement, any debt that was included in the agreement which is still outstanding is written off.
An IVA has a significant impact on your credit rating. A record is added to your credit file and remains for 6 years. During this time you will fail most lender credit checks.
Why is the IVA debt solution so popular?
The statistics (as highlighted above) show that the use of IVAs has become increasingly popular since 2015. There are a number of reasons for this.
For many people, the Arrangement is a good debt solution. It lasts just 5-6 years after which any remaining debt is written off. This is a significantly shorter time than most debt management plans where the monthly payments last for 10 years or more. A DMP lasts as long as it takes to repay in full or settle your outstanding debt.
An IVA also protects your property from your creditors. Unlike going bankrupt, your house is not at risk of being sold.
However, these benefits may not be the only reason for the solution’s growing use. There is concern that the numbers have been increasing due to mis selling. Lead generation companies can earn large commissions by advising people to start an IVA when it may not be in their best interest. The financial regulator (the FCA) is currently trying to clamp down on this practise.
An IVA is not suitable for everyone. You may be better off using an alternative debt solution such as a debt management plan or bankruptcy.
What are the alternative debt solutions?
There are three main alternatives to an IVA. These are the debt management plan, bankruptcy and debt relief order.
A debt management plan is an informal debt solution. Similar to an IVA, it involves negotiating a reduced payments with your debts to an amount you can afford. However, it is a far more flexible solution. That said, a significant disadvantage is the payments continue until 100% of the amount owed is paid or settled. This can take considerably longer than 5 years.
Bankruptcy sounds bad. However for some people it can be the best option. If you go bankrupt your debt is written off. If you can’t afford to make further monthly payments towards it, you don’t have to. You pay nothing more and the process lasts just 12 months. But it is not right for everyone. For example, if your are a home owner, your property could be at risk.
Debt Relief Orders were introduced into the law in 2009. They give the same outcome as bankruptcy. They are available to people who can’t afford to pay the full bankruptcy application fee. However there are strict qualification criteria.
Thinking about starting an IVA? For free confidential advice, give us a call (0800 011 4712) or complete the form below.