Officials from a national debt charity have recently stated that a rising number of people may end up turning to Individual Voluntary Arrangements (IVAs) in order to deal with the credit card debt that they accrue in the current difficult financial climate.

Many people have been turning to their credit cards to get them through various tight spots financially, and without even realising it may have accrued a large amount of credit card debt that they suddenly realise that they will struggle to repay.

An official from a national debt advice agency has said in a recent report that some of the people that find themselves in this position, with a high amount of credit card debt and other unsecured debts that they cannot afford to repay, may find that their best option is to opt for one of these IVAs, which is a legally binding agreement that could help them to get through their debt problems more effectively.

An IVA is often referred to as a softer form of bankruptcy, and in order to qualify borrowers will need to have a certain level of unsecured debt.

For those that do qualify an assessment of outgoings and income is made, and then a plan is set up whereby the borrower makes a set monthly repayment to an agent, which is then distributed amongst the different creditors on a pro rata basis.

Generally, after five years any amount that is still outstanding is written off and the IVA is considered complete.

An official from the debt charity Credit Action stated: “A lot of people are reliant upon being able to borrow on their credit cards to smooth out peaks and troughs in their income and in many unfortunate situations they rely on cards simply to buy essential living costs.”

One Comment

1. Debt Management November 19th, 2009 12:09 pm :

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