IVAs rise as unemployment reaches 2.4 million

The number of people seeking an IVA – individual voluntary arrangements – is rising sharply as unemployment hits 2.4 million, the highest level since 1995.

With 7.8% of the workforce now without work, the number of people slipping into debt problems is set to increase.

There has been a 27% increase in the number of personal insolvencies according to The Insolvency Service, with predictions that 130,000 people will be declared insolvent in 2009.

Of these, IVAs are growing at the fastest rate. An individual voluntary arrangement is made when an individual enters into a formal agreement with their creditors to pay a portion of their debts over a number of years. In return, the creditors agree to write off the remainder of the outstanding debt.

The number of company insolvencies is also increasing sharply, which will drive unemployment rates higher as businesses shed staff. Insolvency experts fear that this will drive more individuals further into debt.