Think Money

Think Money

February 09, 2010 11:04 ET

IVA and DRO Increases Highlight Continuing Debt Problems

LONDON, UNITED KINGDOM--(Marketwire - Feb. 9, 2010) - After the Insolvency Service's latest statistics showed a record level of individual insolvencies in the final quarter of 2009 - with an especially sharp rise in the number of borrowers entering into IVAs - financial solutions company Think Money said that the figures demonstrated the continued difficulty for many borrowers in the current climate, despite some signs of economic recovery.

The company also urged any struggling borrowers who have not yet addressed their debt problems to contact an independent debt adviser at their earliest opportunity.

In its most recent Insolvency Report, the Insolvency Service said that the number of individual insolvencies in England and Wales had risen from 28,471 in the final quarter of 2008 to 35,574 in the final quarter of 2009 - a 24.9% increase.

The number of people entering into IVAs (Individual Voluntary Arrangements) contributed greatly to this increase, rising by 26.3% - from 10,467 in the last quarter of 2008 to 13,219 in the last quarter of 2009.

The introduction of Debt Relief Orders (DROs) in 2009 also contributed to the total - with 5,348 being issued in the final quarter.

Bankruptcies actually fell by 5.5% in the final quarter of 2009, compared with the same period a year earlier, and bankruptcies had in fact been in decline since the first quarter of the year.

A debt expert at Think Money said that the decline in bankruptcies may suggest that people are becoming more aware of the alternative options on offer.

"There are a number of options available to people with unmanageable debts. For example, an IVA can avoid some of the potential downsides of bankruptcy, such as the borrower losing their home. And Debt Relief Orders are for people who have debts of less than £15,000 and little to offer in the way of assets or regular payments.

"But bankruptcy can still be the right option for some people, and it's important that anyone struggling with unmanageable debt speaks with an independent debt adviser to establish which debt solution is best for their circumstances."

Meanwhile, separate research from insolvency experts R3 claimed that around one million people are currently struggling with debt without seeking help.

Commenting on this, the Think Money expert said: "It can be difficult for people in debt to know which debt solution is best for them and unfortunately this may result in many people delaying seeking help.

"But we strongly advise anyone struggling with debt to get advice as soon as they can. Any delay in seeking advice can be costly and is only likely to make their situation worse."

Notes to Editors

One of the UK's leading financial solutions providers, Think Money is based in Salford Quays, Manchester, and employs around 700 employees to deliver a comprehensive range of debt, loan, insurance and banking solutions.

Think Money defines its mission as 'To educate, rehabilitate and advise on all aspects of financial management'.

For more information, contact (0845 056 6480) or visit the Think Money website at

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