People don't understand IVAs
Published On 3 September 2007
More than 20 million people in the UK are unsure what an IVA is, new research shows.Data gathered by moneysupermarket.com showed that 49 per cent of the UK population did not know what an IVA actually is.
Despite this, over half the people questioned said that they would consider taking out an IVA if they found themselves with serious debt problems.
However, 40 per cent said they would only look at an IVA as a last resort and just 11 per cent believed that the debt management tool was completely acceptable.
"For people suffering from spiralling debts, an IVA might seem like an ideal escape route. However, an IVA is not something that should be entered into lightly and without considered thought," explained Tim Moss, head of debt at moneysupermarket.com.
"It is a serious financial agreement with creditors that will typically last five years. Once entered into, it will make obtaining any forms of credit, even for such everyday items as a mobile phone contract, almost impossible."
Mr Moss said that it was important that people took simple steps to cope with their debt before thinking about 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," he concluded.
Figures from the Insolvency Service showed recently that 10,698 people sought IVAs in the second quarter of the year.
