Taking out an individual voluntary arrangement (IVA) is not always the best way to deal with serious debt, an expert has said.
A spokesman for the Insolvency Service Helpline noted that taking on such instruments was a “popular” method of tackling debt management issues.
However, he said, they are not a guaranteed means of sorting out problems, warning: “An IVA is a very strict method of paying back debts and if you do fall behind with an IVA then you can go bankrupt.”
The spokesman stated that other options exist and can be considered.
Where they can work is by creating a “structured” payment situation that can prompt creditors to write off some of the debt so as to avoid the debtor going bankrupt and leaving them empty-handed, he noted.
Britons have begun to collectively reduce the amount they owe, according to debt charity Credit Action.
The organisation’s figures for July showed a net reduction of £0.6 billion owed during the month.