IVAs allow consumers to "write off" some of debts

An individual voluntary arrangement (IVA) allows debtors to "write off" some of what they owe as well as being able to "get their affairs in order", a financial expert has claimed.

IVAs allow the debtor to structure debt repayments over a five-year period by agreeing to pay their creditors a set amount over that time.

With rapidly increasing record personal debt levels, IVAs and insolvencies are becoming much more common among younger people, as the five-year limit allows some debt to be written off, rather than being put on the "back burner", R3 said.

Nick O`Reilly, vice president of R3, added: "Now an awful lot of people in their twenties are getting themselves into debt problems; have no real assets and the voluntary arrangement allows them the chance to at least get their affairs in order before such time as they perhaps need to get a mortgage and settle down."

R3 is the brand name of the Association of Business Recovery Professionals, which specialises in helping with insolvencies.