More IVA's strengthen debt management company, October 24 2006

There has been much recent exposure about debt recently. Daytime T.V., the press, websites and radio are all reporting record level of bankruptcies and other debt solutions. With UK debt at record levels the debt management companies are reporting record business.

One such entity is Debts.co.uk who have reported a 79% jump in turnover to £6 million and a 62% increase in pre-tax profit to £2 million. Amongst others, individual voluntary arrangements (IVA's) and bankruptcy are the solutions offered to their over-indebted customers.

Individual voluntary arrangements are a bankruptcy alternative that allows an individual to repay a percentage of the debt over a fixed period of time. After six years the notice of the IVA is wiped from the credit file. Many companies are heavily promoting this solution.

As a result of this promotion the banks are calling for tighter regulation claiming that they are losing money to customers who are opting for these solutions that alleviate their debt burden. The prudential recently reported that Egg has experienced lower recoveries than has typically been achieved. Other major banks have also stressed concern following result releases.