Last year, over 107,000 people became insolvent with 44,000 people opting for an IVA and 63,000 people choosing bankruptcy.

Figures show that the IVA has a larger growth margin in comparison to bankruptcy as people are still afraid of the social stigma attached to becoming bankrupt.

Those suited to an IVA
An IVA is perfect for those who are earning a regular income and have acquired debt to the region of £15,000 and above. The perfect person for an IVA would be someone who is in professional employment and is guilty of over indulgence with their borrowing. An IVA will allow such a person to pay a set monthly sum per month for up to five years to clear the debt. There will be a small percentage of the debt written off for those who commit themselves to the IVA and the debtor must be able to afford at least £200 per month towards his IVA agreement. An IVA is also suitable to someone who owns a property as their home will be protected. However, if the value of the property should rise throughout the duration of the IVA, creditors could make a further claim and insist that more of the debt repaid.

Those suited to bankruptcy
Bankruptcy is suitable for people who earn a very low wage or have no income whatsoever. The average age for people applying for bankruptcy is around 30 plus. A person does not have to owe thousands of pounds for a creditor to force them into bankruptcy and a person can be made bankrupt if they only owe as little as £750. Anyone can declare themselves bankrupt but they must be able to afford administration costs of £310 and court fees to the value of £140. Under bankruptcy law, the debtor loses control of his assets which are passed over to an official receiver who will sell them and work out a settlement figure for creditors. An individual may be allowed to keep a car if it is necessary for work purposes. There are implications of bankruptcy. A Bankruptcy note will remain on an individual’s credit report for six years.