Debt deals to top 50,000 in 2008

Individual voluntary arrangements are set to soar in 2008, experts have suggested, after the industry thrashed out new rules for the set-ups and the onset of the credit crunch.

David Mond, CEO of debt managers Cleardebt, said IVA figures are expected to smash the 50,000 barrier 'quite easily' in 2008. There were just over 40,000 IVAs in 2006 and 2007.

The new rules follow wrangles between IVA providers and the banks, which felt they were getting a raw deal from the arrangements. Some even imposed caps on fees to IVA providers.

But the British Bankers Association, the Insolvency Service and the IVA forum have agreed a ‘protocol’ to make it easier to have IVAs accepted.

Practitioners will be paid lower up front fees under the plan. ‘We should now see an increase [in IVAs] now the war’s over,’ said Mond. Part of the increase will come from a backlog of delayed IVAs, it is thought.

‘People in debt and their creditors need to know that when an IVA is proposed it is the most appropriate solution,’ said BBA chief executive Angela Knight.

‘The BBA, the Insolvency Service and the participating IVA providers are united in support for this agreement, which should provide customers with the reassurances they need in order to make the right choice for their financial futures.’