Brits in the dark over IVAs
Monday, 03 September 2007 12:00
As many as 49 per cent of Britons do not know what an individual voluntary arrangement (IVA) is, or understand its role in alleviating debt.
Research from MoneySupermarket.com reveals today half of the population don't know what an IVA is, rising to 64 per cent among 18 to 24 year olds.
The news comes despite increasing worries about rising debts levels and an advertising campaign designed to raise awareness of the scheme.
Despite this lack of awareness, 11,105 IVA's were taken out in England Wales between April and June this year, an increase of 35 per cent on the second quarter.
But, given the apparent lack of understanding, there is concern about their use.
"An IVA is not something that should be entered into lightly and without considered thought. It is a serious financial agreement with creditors that will typically last five years," commented Tim Moss, head of debt at MoneySupermarket.
"Once entered into, it will make obtaining any forms of credit, even for such everyday items as a mobile phone contract, almost impossible."
While more than half of adults said they would considered getting an IVA, two in five said it would be the last resort.
There are also concerns that as many as seventeen per cent of people think IVA's are a good way of avoiding bankruptcy.
"There are many simple and practical steps people can take to get to grips with their financial situation before taking a drastic step such as declaring bankruptcy or entering into an IVA.
"People should first seek debt advice from one of the free advice agencies such as the Citizens Advice Bureau, then cut their excess spending and look to switch their debts to lower interest rate products to save some much needed money," concluded Mr Moss.
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