The number of active IVAs could be on the rise even though personal insolvencies are dropping, according to new statistics. Recent figures show that in the 3rd quarter of 2011, personal insolvencies were down by 11% on the same quarter in 2010.
The figures make interesting reading. Between July and September 2011 a sizable 9,567 people filed for bankruptcy. As scary as this sounds, the quarter before an even more significant 11,113 people found themselves in the same insolvent boat. This means the number of insolvencies around has significantly decreased in just 6 months. So why are IVAs on the rise?
In contrast to the insolvency figures, IVAs are still increasing. This year’s 2nd quarter saw 12,143 people enter into IVAs, whilst the 3rd quarter saw even more IVAs: 13,048. If insolvencies are apparently decreasing, why are IVAs on the rise?
There are a number of possibilities. Bankruptcy is the final resort in terms of insolvencies and it is generally only applicable if debt management solutions have failed or are impossible. It is plausible that people are much more in the know about the other ways they can handle unmanageable debts (using IVAs for example). This would mean that even though IVAs are rising, they are keeping insolvency levels in decline. This could be proof that IVAs are often successful in the end, preventing debtors from reaching rock bottom.
Another possibility is that the introduction of debt relief orders (DROs) in 2009 has gradually slowed and reduced insolvency figures.
Whatever is causing the decline in bankruptcy and the rise in IVAs, it is certainly an interesting phenomenon which we will be keeping our eye on here at IVA Service. If you’d like to learn more about IVAs and how they can help you deal with spiralling debts, visit the rest of our site to learn how IVAs work and whether you are a suitable candidate.