Individual voluntary arrangements (IVAs) are a welcome alternative to bankruptcy, an industry information group has said today.

According to IVA.co.uk, the agreements are an "absolute lifeline" to people that are struggling to pay off their loans and other forms of debt.

In basic terms, an IVA is a formal agreement between the person in debt and their creditors, usually to make either reduced payments or to reduce the total debt.

According to IVA.co.uk, it is often the case that, after five years, the debt is considered to be settled.

Andy Davie, spokesperson and site manager, said: "If used correctly and if proposed correctly, IVAs are an absolute lifeline."

He added that the deals can also be beneficial for lenders: "At the end of the day, the creditor receives more dividend than through bankruptcy, and the debtor has the chance to start his life, or her life, again, after five years."

In related news, consumers with poor credit ratings may benefit from sub-prime credit cards, according to Provident Financial.

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